" vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA Nos. 1276 & 1277/JP/2024 fu/kZkj.k o\"kZ@Assessment Years : 2014-15 & 2015-16 Ajay Bakliwal C 6 Vallabh Bari, Vallabh Bari, Kota cuke Vs. ACIT, Central Circle, Kota LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABZPB 7775 P vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Rajendra Sisodia jktLo dh vksj ls@ Revenue by : Shri Rajesh Ojha, CIT-DR lquokbZ dh rkjh[k@ Date of Hearing : 05/02/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 11/04/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM By way of present appeal, the assessee challenges the order of learned Commissioner of Income Tax (Appeal), Udaipur-2 dated 30.09.2024 [ for short CIT(A)] for assessment years 2014-15 & 2015-16. The said order of the ld. CIT(A) arises as against the order dated 28.12.2019 passed under section 143(3) r.w.s. 153A of the Income Tax Act, 1961 [for short Act ] by ACIT, Central Circle-Kota [ for short AO]. 2 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT 2. Succinctly, the fact as culled out from the records is that a search & seizure operation under section 132(1) of the Act was carried out on 07.09.2017 at the various premises of ‘Resonance Group, Kota’ to which the assessee belongs, and his case was covered in that search. Assessee is an individual and derives income under the head, salary, Income of business or profession and income from other sources. Pursuant to search action notice u/s 153A of the Act was issued to the assessee on 05.07.2018 which was duly served. In response to notice issued u/s 153A, the assessee furnished his return of income on 11.08.2018, declaring total income of Rs. 41,08,200/-. Earlier the assessee had filed his return of income u/s 139 of the Act on 05.11.2014 at the total income of Rs. 41,08,200/- and assessed u/s 143(3) at the total income of Rs. 82,99,020/- and after appeal effect u/s 250 total income of the assessee was Rs. 60,86,646/-. Effectively there is no difference between ITR filed under section 153A and 139 of the Act. 2.1 Ld. AO noted that during the course of search action u/s 132 of Act at the residence of Shr. R.K. Verma, a paper was found and seized as Page No.56 of Exhibit-17 of Annexure-AS. As per seized document page no. 93 Shri R. K. Verma has made a payment of Rs. 16,50,00,000/- in FY 2013-14 and 2014-15. In the paper it was also mentioned that the amount is given 3 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT without interest and will not be taken back by Shri R. K. Verma. The paper had entry of payment made by Shri Ram Kishan Verma to the assessee Shri Ajay Bakliwal of Rs. 10,75,00,000/- and Rs. 15,00,00,000/- [Total 25,75,00,000/-]. Sh. Ram Kishan Verma was asked to explain the nature of payment made by him. Shri Ram Kishan Verma in his statement admitted that the sum was paid to dissolve the Joint Venture concern Vinamra Enterprises and Nav Bharat Nirman Company and to settle all dues and dispute between Shri Ram Kishan Verma and the assessee, Shri Ajay Bakliwal. 2.2 The assessee, Shri Ajay Kumar Bakliwal in his statement recorded u/s 132(4) of I.T. Act, 1961 on 07.09.2017 had categorically admitted that he had received Rs. 25,75,00,000/- from Shri Ram Kishan Verma. He admitted that an amount of Rs. 7,75,00,000/- received during the period 11.04.2013 to 17.12.2013 has shown in his books as receipt against work. During the F.Y. 2013-14 Nav Bharat Nirman Co. the proprietorship concern of Shri Ajay Kumar Bakliwal had constructed House and Commercial Complex under Affordable Housing Scheme, Kansua for Vinamra Enterprises and Nav Bharat Nirman Co.[JV]. Apart from that the amount of Rs 15,00,00,000/- and Rs. 1,50,00,000/-received during F.Y. 2013-14 & 2014-15 respectively have shown by him as unsecured loan in the books of 4 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT his another JV concern Nav Bharat Nirman Co. [JV]. In reply to Q.No.15 Shri Ajay Kumar Bakliwal specifically admitted that above amount of Rs. 16,50,00,000/- was not unsecured loan rather sum received in lieu of resolution of dispute between him and Shri Ram Kishan Verma and to dissolve their Joint Venture concern (Vinamra Enterprises and Nav Bharat Nirman Co.). He further admitted that this was his income of relevant assessment year which he had not shown in his Income Tax Return. This income was in addition to his regular income. The unsecured loan shown by Shri Ajay Kumar Bakliwal in his books of concern was not genuine but bogus. Therefore, he admitted the above amount of Rs. 16,50,00,000/- as undisclosed income of relevant assessment year and offered the same for taxation. Apart from above Rs. 16,50,00,000/- Sh. Ajay Kumar Bakliwal had received around Rs. 2,00,00,000/- from Shri Ram Kishan Verma and the same was shown by him as unsecured loan in his books of F.Y. 2014-15 and as work receipt in the books of his proprietorship concern Nav Bharat Nirman Co. Не admitted that he received the amount due to him and now there was no amount due to him from Ram Kishan Verma. As the assessee has offered this income during search but not included in his return filed u/s 153A therefore a show cause notice was given to the assessee vide notice dated 14.12.2019. The assessee replied on 19.12.2019 stating that the 5 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT amount of Rs. 15,00,00,000/- is fully accounted for and is mentioned as an unsecured loan in the books of Nav Bharat Nirman Co. JV for the AY 2014- 15 and Rs. 1,50,00,000/-is fully accounted for and is mentioned as unsecured loan in the books of unsecured loan in the books of Nav Bharat Nirman Co. JV for the AY 2015-16, and Rs. 2,00,00,000/- is in his personal books of accounts for AY 2015-16. Ld. AO considered the submission of the assessee but not found satisfactory. The assessee has offered this income during search in statement recorded u/s 132(4) in presence of independent witnesses and the same has been confirmed by Shri R K Verma in statement u/s 132(4). Both the persons were at different locations and said the same thing and now the assessee is retracting from his statement. This is an afterthought of the assessee to save himself from taxation. Further it is also noticed that the assessee has not paid any interest on the unsecured loans of Rs. 18,50,00,000/- in any of the following FYs and not repaid the loan also till date. Considering the general business practice, the contention of the assessee is not tenable. The entire submission of the assessee was considered as an afterthought to escape from tax liability by the assessee. Ld. AO relying on the decision of our own Hon'ble Rajasthan High Court in D. B. Income Tax Appeal No. 67/2002 in the case of Commissioner of 6 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT Income Tax, Bikaner versus Shri Ravi Mathur noted that once a statement is recorded u/s. 132(4) such a statement can be used as strong evidence against the assessee in assessing the income, the burden lies on the assessee to establish that the admission made in the statement are incorrect / wrong and that burden has to be discharged by an assessee at the earliest point of time. Based on that contention ld. AO made the addition of Rs. 15,00,00,000/- received by the assessee from Shri R. K. Varma as unsecured loan as undisclosed income based on the statement recorded u/s. 132(4) of the Act. 2.3 During the search action document inventorised at page no. 6 to 9 of Exhibit 08 was found. On those documents payments made to M/s Nevaji Estates (P) Ltd., is recorded. As per the document seized, part payment has to be made in white (ek number) and part payment has to be made in black. In white Rs. 2,13,90,000/- has to be paid while as per black Rs. 4,80,00,000/- has to be paid. In ek number cost has been taken at 400 whereas as per black cost has been taken at 885. An amount of Rs. 2,00,00,000/- has been paid in black and Rs. 65,99,000/- has to be paid in black. Thus, it is inferred that an amount of Rs. 2,65,99,000/- have been paid in cash by the assessee. During the assessment proceeding, a show cause, notice was given to the assessee vide notice dated 14.12.2019 7 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT asking about the same. In response the assessee has submitted his reply on 17.12.2019 that the document seized does not belong to him and related to M/s Milenium Buildhome Pvt Ltd. And in the case of M/s Milenium Buildhome Pvt Ltd, the assessee is saying that the document pages ages are rough and dump. In his reply to the assessee has admitted that an agreement was executed with Newaji Estate P Ltd to purchase a land in Parvatipuram Kota at the rate of Rs. 400 per sqr ft and paid Rs. 51,11,111/- as first instalment. Ld. AO considered the reply but not found satisfactory. The document was seized from the assessee's premises, and it is related to agreement with Newaji Estate P limited. Further as per the agreement assessee agreed to purchase 53,475 sqr ft land at B-1 Parvatipuram, Kota at the rate of Rs. 400 per square for a total consideration of Rs. 2,13,90,000/-. And Rs. 51,11,111/-was paid as first instalment. These figures exactly match with the loose paper noting. And assessee has not denied the fact that the paper is not related to M/s Newaji Estate P Ltd (In his submission he mentioned the name of this firm). As per these loose papers noting payment of Rs. 2,00,00,000/- and Rs. 65,99,000/-was made in cash and these payment is not recorded in his books of accounts. Therefore, the payment of Rs. 2,65,99,000/- in cash as mentioned in the loose paper is added to the total income of the assessee 8 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT treated as investment from undisclosed sources u/s 69 and tax is charged as provisions of section 115BBE of the IT Act. 3. Aggrieved from the order of Assessing Officer, assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below: Validity of order passed 143(3)/153A of the Act. “4.4 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- The appellant has argued in this ground of appeal that there was no incriminating document found during search relevant for making addition during the year. The arguments of the appellant are considered but not found to be acceptable. 4.4.1 Incriminating Material found during search The argument of the appellant is that no incriminating material found during search. The argument is made by the assessee without considering the fact that incriminating material was not only found but confronted with the assessee and the assessee himself admitted that the transaction were in the nature of income which was not offered for taxation. During the course of search action u/s 132 of I.T.Act, 1961 at the residence of Sh. R.K. Verma, a paper was found and seized as Page No.56 of Exhibit-17 of Annexure-AS. In the statement recorded u/s 132(4), the assessee himself admitted that an amount of Rs.16.50 crore was his income of relevant assessment year which he had not shown in his Income Tax Return. This income was in addition to his regular income. During the course of search action in the caseof Sh. Ajay Bakliwal some document were seized from the business premise of Sh.Ajay Kumar Bakliwal which has been inventorised at page no. 6 to 9 of Exhibit 08, Page No. 6 to 9 of exhibit have details of payments to M/s NevajiEstates (P) Ltd. It is also noted that seized page no. 49 to 57 of annexure - AS Exhibit-01 is found from the premise of the assessee during the search. It is admitted to be dissolution deed and balance sheet of JV with Mr. R. K. Verma. The content of the 9 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT seized documents are admitted by the assessee in the statement recorded u/s 132(4) of the Income Tax act in reply to question no. 18. It is important to note that the admission of Rs. 16,50,000/- made in reply to question no. 15 and 16 of the statement recorded u/s 132(4) is related to transaction of this dissolution deed only. Part of the papers are found from the possession of one partner i.e. Sh. R. K. Verma and Part of the papers are found from the possession of Sh. Ajay Bakliwal, the assessee. On the basis of these seized documents, it is conclusively proved that there were incriminating documents seized even from the possession of the assessee also. It is observed that the statement recorded u/s 132(4) is corroborated by statement recorded u/s 132(4) of another party involved in the transaction i. e. Sh. R. K. Verma who paid the amount of Rs. 16,50,00,000/- to the assessee. The statement is further corroborated by the seized document in the search from the possession of the assessee as well as the other partner. These seized documents show that the amount paid is related to dissolution dispute settlement payment made by Sh. R. K. Verma to the assessee. This amount was not to be repaid unless agreed by the assessee as per the seized pages. On the basis of these evidences, it is evident that there was incriminating material found during the search at the premises of the assessee. The incriminating material from the premises of Mr. R. K. Verma was confronted with the assessee during the search and the assessee admitted the transaction. Mr. R. K. Verma also admitted this transaction. Hence, finding of incriminating material is not in dispute in this case. The statement recorded u/s 132(4) is an important piece of evidence and it is an incriminating material. The Kerala High Court on this issue held in the case of Commissioner of Income-tax, Thichur Vs St. Francis Clay Décor Tiles [2016] 70 taxmann.com 234 (Kerala)/[2016] 240 Taxman 168 (Kerala)/[2016] 385 ITR 624 (Kerala)/[2016] 287 CTR 187 (Kerala) (22-03-2016] as under- \"Neither under section 132 or under section 153A, is the phraseology \"incriminating used by the Parliament Therefore, any material which was unearthed during search operations or any statement made during the course of search by the assessee is a valuable piece of evidence in order to invoke section 153A of the Income Tax Act, 1961.\" In this case also, statement recorded u/s 132(4) of the IT Act of assessee is an incriminating material and the statement is a valuable piece of evidence in order to invoke section 153A of the Income Tax Act, 1961. Relevancy and evidentiary value of statement obtained under oath during the search proceedings are no longer res integra. In the decision of the Supreme Court in the case of Banalal Jat Constructions (P.) Ltd. v. Asstt. CIT (2019) 106 taxmann.com 128/264 Taxman 5, after referring to the judgment of Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 0018, the legal position 10 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT in relation to a statement under section 132(4) of the Income-tax Act, 1961 was set out as under: a. An admission is an extremely important piece of evidence though it is not conclusive. b. A statement made voluntarily by the appellant could form the basis of assessment. The mere fact that the appellant retracted the statement could not make the statement unacceptable. d. The burden lay on the appellant to show that the admission made by him in the statement earlier at the time of survey was wrong. Such retraction, however, should be supported by a strong evidence stating that the earlier statement was recorded under duress and coercion, and this has to have certain definite evidence to come to the conclusion that indicating that there was an element of compulsion for appellant to make such statement. e. However, a bald assertion to this effect at much belated stage cannot be accepted. Applying the aforesaid legal proposition herein, I am of the opinion that once a statement is recorded during search, it is open to the assessing officer to rely and proceed on the basis that such statement is correct and represents the true state of affairs and the burden is on the deponent to demonstrate by letting cogent convincing and material evidence that the statement was incorrect. Therefore, the statement made under oath during search and survey proceedings has a strong evidentiary value and is binding on a person, who makes it. The incriminating documents is related to the business partner Shri Ajay Bakliwal the incriminating transactions recorded in the seized documents also related to him and his business partner with Shri R.K. Verma in respect of JV. Hon'ble High Court Of Madras in the case of SRS Mining Vs. Union of India [2022] 141 taxmann.com 272 (Madras) held that material collected pursuant to search jointly conducted against three persons and a firm was required to be dealt with under section 153A, and not under section 153C. In the present case also, the material collected pursuant to search jointly conducted against these two persons who were partners of JV was required to be dealt with under section 153A. In view of incriminating material found during the search and the incriminating material in the form of statement recorded u/s 132(4) where 11 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT undisclosed income is admitted by the assessee, the decisions relied upon by the appellant are not found to be applicable on the facts of the case. Hon'ble Supreme Court Of India in the case of Principal Commissioner of Income-tax, Delhi-2 v. Best Infrastructure (India) (P.) Ltd. [2018] 94 taxmann.com 115 (SC)/[2018] 256 Taxman 63 (SC) [14-05-2018] has granted SLP in this case also. The head note of the decision are as under- \"Section 153A of the Income-tax Act, 1961-Search and seizure Assessment in case of (General) - Assessment years 2005-06 to 2009-10 High Court by impugned order held that where during search proceeding one of directors of assessee-company surrendered a certain sum as undisclosed income only for assessment year in question and not for each of six assessment years preceding year of search, said submission could not be said to be incriminating material qua each of preceding assessment years and, consequently, assumption of jurisdiction under section 153A and consequent additions made by Assessing Officer on said basis were not justified - Whether SLP against said impugned order was to be allowed-Held, yes [Para 1] [in favour of revenue]\" Without prejudice to the above, in the case of the assessee, there is clear admission made by the assessee relevant to current year in the statement u/s 132(4) of the Act recorded during the search based on seized material and other corroborative evidences. Therefore, it can be said that there was incriminating material found during the search relevant to current year. The assumption of jurisdiction by the AO u/s 153A is found to be justified and upheld. This ground of appeal is treated as dismissed.” Completion of assessment order without providing adequate opportunity of being heard 5.3 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under.- The appellant has raised the issue that sufficient time was not provided to the assessee. Hence, there is violation of principles of natural justice. In this case, notice u/s 153A was issued to the assessee on 05.07.2018. In response to this notice the assessee has submitted his ITR for the A.Y. 2014-15 on 11.08.2018. Notice u/s 143(2) of the IT Act, 1961 was issued to the assessee on 11.09.2018. Thereafter, notice u/s 142(1) of the IT Act, 1961 along with detailed questionnaires were issued to the assessee on 30.11.2018 fixing the case for hearing on 18.12.2018. Further due to change of incumbent, fresh notice u/s 142(1) of the IT Act, 1961 was issued to the assessee on 29.08.2019. 12 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT Another notice u/s 142(1) of the Act was issued on 14.12.2019 fixing the case for hearing on 16.12.2019. The assessee replied on 19.12.2019. The reply of the assessee was duly considered before passing assessment order. It is not that the AO has passed order without considering the reply furnished. There is no evidence that the appellant requested further time and the AO has not granted. Therefore, no prejiudice is caused to the assessee because of less time provided by the AO. The appellant has not furnished any evidence that he requested for adjournement and the adjournment was not granted. In these facts, the allegation of denial of adequate opportunity and violation of principles of natural justice is not found to be acceptable. The AO has provided sufficient time, the reply furnished is considered by the AO. Hence, the issue raised is found to be without any merit. This ground of appeal is treated as dismissed. Addition of Rs. 15,00,00,000/- on account of undisclosed income as cessation of liability 6.7 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- The AO noted in this case that during the course of search action u/s 132 of I.T.Act, 1961 at the residence of Sh. R.K. Verma, a paper was found and seized as Page No. 56 of Exhibit-17 of Annexure-AS. As per seized document page no. 93 shri R K Verma has made payment of Rs. 16,50,00,000/- in FY 2013-14 and 2014-15. In the paper it was also mentioned that the amount is given without interest and will not be taken backby Shri R K Verma. The paper had entry of payment made by Sh. Ram Kishan Verma to the assessee Sh. Ajay Bakliwal of Rs. 10,75,00,000/- and Rs. 15,00,00,000/- (Total Rs.25,75,00,000/-]. Sh. Ram Kishan Verma was asked to explain the nature of payment made by him. Sh. Ram Kishan Verma in his statement admitted that the sum was paid to dissolve the Joint Venture concern Vinamra Enterprises and Nav Bharat Nirman Company and to settle all dues and dispute between Sh. Ram Kishan Verma and the assessee, Sh. Ajay Bakliwal. The assessee, Sh. Ajay Kumar Bakliwal in his statement recorded u/s 132(4) of I.T. Act, 1961 on 07.09.2017 had categorically admitted that he had received Rs. 25,75,00,000/- from Sh. Ram Kishan Verma. He admitted that an amount of Rs. 7,75,00,000/- received during the period 11.04.2013 to 17.12.2013 has shown in his books as receipt against work. During the F.Y. 2013-14 Nav Bharat Nirman Co. the proprietorship concern of Sh. Ajay Kumar Bakliwal had constructed House and Commercial Complex under Affordable Housing Scheme, 13 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT Kansua for Vinamra Enterprises and Nav Bharat Nirman Co. (JV). Apart from that the amount of Rs 15,00,00,000/- and Rs. 1,50,00,000/-received during F.Y. 2013- 14 & 2014-15 respectively have shown by him as unsecured loan in the books of his another JV concern Nav Bharat Nirman Co. [JV). In reply to Q.No.15 Sh. Ajay Kumar Bakliwal specifically admitted that above amount of Rs. 16,50,00,000/- was not unsecured loan rather sum received in lieu of resolution of dispute between him and Sh. Ram Kishan Verma and to dissolve their Joint Venture concern (Vinamra Enterprises and Nav Bharat Nirman Co.). He further admitted that this was his income of relevant assessment year which he had not shown in his Income Tax Return. This income was in addition to his regular income. The unsecured loan shownby Sh. Ajay Kumar Bakliwal in his books of concern was not genuine butbogus. Therefore, he admitted the above amount of Rs. 16,50,00,000/- as undisclosed income of relevant assessment year and offered the same for taxation, Statement of Sh. Ajay Bakliwal, Prop. M/s Nav Bharat Nirman Company, was recorded during the course of search action on 07.09.2017. Apart from above Rs. 16,50,00,000/- Sh. Ajay Kumar Bakliwal had received around Rs.2,00,00,000/- from Sh. Ram Kishan Verma and the same was shown by him as unsecured loan in his books of F.Y. 2014-15 and as work receipt in the books of his proprietorship concern Nav Bharat Nirman Co.. He admitted that he received the amount due to him and now there was no amount due to him from Ram Kishan Verma. The assessee has offered this income during search but not included in his return filed u/s 153A therefore a show cause notice was given to the assessee vide notice dated 14.12.2019 asking about the same. The assessee replied on 19.12.2019 stating that the amount of Rs. 15,00,00,000/- is fully accounted for and is mentioned as unsecured loan in the books of Navbahart Nirman Co. JV for the AY 2014-15 and Rs.1,50,00,000/-is fully accounted for and is mentioned as unsecured loan in the books of unsecured loan in the books of Navbahart Nirman Co., JV for the AY 2015-16 and Rs. 2,00,00,000/- is in his personal books of accounts for AY 2015-16. The submission of the assessee was considered but not found satisfactory. The assessee has offered this income during search in statement recorded u/s132(4) in presence of independent witnesses and the same has been confirmedby Shri R K Verma in statement u/s 132(4). Both the persons were at different locations and said the same thing and now the assessee is retracting from hisstatement. This is an afterthought of the assessee to save himself from taxation. Further it is also noticed that the assessee has not paid any interest on the unsecured loans of Rs. 18,50,00,000/- in any of the following FYs and not repaid the load also till date. Considering the general business practice, the contention of the assessee is not tenable. 14 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT The entire submission of the assessee is considered as an after thought to escape from tax liability. The AO has relied upon the decision of the Hon'ble Rajasthan High Court has ordered in D. B. Income Tax Appeal No. 67/2002 in the case of Commissioner of Income Tax, Bikaner versus Shri Ravi Mathur, A-8 Shyam Nagar, Jaipur regarding retraction of surrendered amount. Considering the facts of the case, the amount of Rs. 15,00,00,000/- received by the assessee during the year from Shri R K Verma and shown as unsecured loan in his books of accounts is added in total income of the assessee treated as undisclosed income. Since, the assessee has offered this amount during search in statement u/s 132(4) but not included the same in his total income before filling his return of income. The arguments put forth by the assessee with regard to this addition are discussed and decided as under- 6.7.1 The assessment is correctly made u/s 153A The appellant argued that the document related to transaction Rs. 16,50,00,000 found from the other person. The AO has argued in the remand report in this regard that this should be considered under the light of the facts that Shri Ajay Bakliwal and Shri R.K. Verma were business partner. They formed a JV in the name of \"VINAMRA ENTERPRISES & NAV BHARAT NIRMAN CO. Both or either of them can have documents and information with them related to their business. Both the persons searched. In the common search the document can be found from any of the partner. They never denied the formation of JV. They both accepted it in statements. The Documents were seized from one partner Shri R.K.Verma was the documents having the transactions of payment given to Shri Ajay Bakliwal to put out the dispute arose in respect of JV. Both the partner never denied the existence of dispute even they both accepted it with acceptance of settlement to put out the dispute and execution of transaction in performance of settlement. Further statements of persons were recorded u/s 132(4) on oath. Both were at different locations. They both stated the same facts. The statements of Shri R.K.Verma was confronted to Shri Ajay Bakliwal and he did accepted the facts stated by Shri R.K.Verma and did not deny. During the statements the seized documents were made known, seen and read by Shri Ajay Bakliwal. The arguments of the AO furnished in the remand report are found to be acceptable. The incriminating documents is related to the business partner Shri Ajay Bakliwal the incriminating transactions recorded in the seized documents also related to him and his business partner with Shri R.K. Verma in respect of JV. 15 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT It is also observed that incriminating material was also seized from the premises of the assessee. The AO reported that during the course of search action in the caseof Sh. Ajay Bakliwal some document were seized from the business premise of Sh.Ajay Kumar Bakliwal which has been inventorised at page no. 6 to 9 of Exhibit 08, Page No. 6 to 9 of exhibit have details of payments to M/s Nevaji Estates (P) Ltd. It is also noted that seized page no. 49 to 57 of annexure - AS Exhibit-01 is found from the premise of the assessee during the search. It is admitted to be dissolution deed and balance sheet of JV with Mr. R. K. Verma. The content of the seized documents are admitted by the assessee in the statement recorded u/s 132(4) of the Income Tax act in reply to question no. 18. It is important to note that the admission of Rs. 16,50,000/- made in reply to question no. 15 and 16 of the statement recorded u/s 132(4) is related to transaction of this dissolution deed only. Part of the papers are found from the possession of one partner i.e. Sh. R. K. Verma and Part of the papers are found from the possession of Sh. Ajay Bakliwal, the assessee. On the basis of these seized documents, it is conclusively proved that there were incriminating documents seized even from the possession of the assessee also. Hon'ble High Court Of Madras in the case of SRS Mining Vs. Union of India [2022] 141 taxmann.com 272 (Madras) held that material collected pursuant to search jointly conducted against three persons and a firm was required to be dealt with under section 153A, and not under section 1530. In the present case also, the material collected pursuant to search jointly conducted against these two persons who were partners of JV was required to be dealt with under section 153A. It is not the case of the assessee that the seized document is not pertaining to him. It is not the case of the assessee that he was not partner of the JV with Mr. R. K. Verma. It is not the case of the assessee that the seized documents were not confronted with him during the search or after the search. The assessee got reasonable opportunity to explain the document. In these facts, the argument of the assessee that the seized document was not found from the possession of the assessee are not fond to be relevant. In view of the above discussion, it is held that the assessment was not required to be made u/s 153C and it is correctly made u/s 153A of the Income Tax Act. 6.7.2 The addition is based on Evidence 16 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT The appellant argued that during the assessment proceedings, the assessee has discharged the burden by filing the evidences in support of retraction made by the assessee is also does not prove any purpose The AO in the remand report stated that the acceptances of both the partners of JV during the search prevail over the retraction as the acceptances are supported and corroborated with the concrete evidences having more strength than the retraction which is not supported by anything which could prove that the receipt of the payments by Shri Ajay Bakliwal was not in agreement with the mode explained as agreed for settlement of dispute. The AO further stated that the copy of ITR, Show cause notice, assessment order in the case of Nav Bharat Nirman Co. (JV) is the scenario after having accommodated the receipt of payment of settlement amount as loans and which was happened as per the exact intent of the settlement of dispute agreed. Therefore the argument of the assessee has no force and has failed to prove that there was no receipt of payment in motivated mode in the form of bogus loan. Even the assessee himself is providing the true execution of receiving payments under settlement by mode of loan. On the facts of the case, the arguments of the appellant are not found to be acceptable. The assessee has only advanced a reason for retraction that he was not aware that the amount received as loan was already accounted for in the books of accounts. This reason is not found to be correct as this fact is mentioned in the seized document on the basis of which the assessee admitted and offered this amount of Rs. 16,50,00,000/- for taxation. In the statement recorded during the search this transaction was admitted that this amount shown as unsecured loan in the books of Nav Bharat Nirman Co. (JV) is not actually unsecured loan but the amount was given by Sh. R. K. Verma for settling the dispute between both the partners in another JV in the name of 'Vinamar Enterprises & Navbharat Nirman Co... Then after considering the seized documents, real facts of the case and statement of Mr. R. K. Verma the assessee accepted this as undisclosed income and promised to pay due taxes. Hence, the arguments taken by the assessee for making retraction are not found to be acceptable. 6.7.3 The Statement is corroborated by other evidences and books of accounts The AO noted that the assessee, Sh. Ajay Kumar Bakliwal in his statement recorded u/s 132(4) of I.T. Act, 1961 on 07.09.2017 had categorically admitted that he had received Rs. 25,75,00,000/- from Sh. Ram Kishan Verma. He admitted that an amount of Rs. 7,75,00,000/- received during the period 11.04.2013 to 17.12.2013 has shown in his books as receipt against work. During the F.Y. 2013- 14 NavBharat Nirman Co. the proprietorship concern of Sh. Ajay Kumar Bakliwal had constructed House and Commercial Complex under Affordable Housing Scheme, Kansua for Vinamra Enterprises and Nav Bharat Nirman Co.[JV]. 17 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT The amount of Rs. 7,75,00,000/- is not disputed by the assessee which is part of the total receipt of Rs. 25,75,00,000/- from Sh. Ram Kishan Verma. This amount is part of the books of accounts of the assessee. Therefore, the amount as accepted in the statement is corroborated by the books of accounts of the assessee. Therefore, it cannot be said that the addition is based only on the basis of the statement recorded u/s 132(4) of the Income Tax act. The statement is corroborated by the seized documents which are found from the premise of the assessee and from the premise of the business partner Sh. R. K. Verma in a common search. The admission so made by the assessee is further corroborated by the books of accounts of the assessee. The assessee cannot be allowed to accept part of the transaction and deny the remaining part of the transaction. Apart from Rs. 16,50,00,000/- Sh. Ajay Kumar Bakliwal had received around Rs. 2,00,00,000/- from Sh. Ram Kishan Verma and the same was shown by him as unsecured loan in his books of F.Y. 2014-15 and as work receipt in the books of his proprietorship concern Nav Bharat Nirman Co. He admitted that he received the amount due to him and now there was no amount due to him from Ram Kishan Verma. This amount shown as receipt from Shri R. K. Verma is part of the books of accounts of the assessee. This amount is not disputed by the assessee. The assessee cannot be allowed to accept part of the transaction and deny the remaining part of the transaction. The assessee is only disputing the amount of Rs. 15,00,00,000/- saying that it is fully accounted for and is mentioned as unsecured loan in the books of Navbahart Nirman Co. JV for the AY 2014-15. The assessee is also disputing the amount of Rs. 1,50,00,000/- saying that it is fully accounted for and is mentioned as unsecured loan in the books of Navbahart Nirman Co. JV for the AY 2015-16. The assessee is not disputing the amount of Rs. 2,00,00,000/- is shown in his personal books of accounts for AY 2015-16. On this issue, the AO has also stated that the assessee has not paid any interest on the unsecured loans of Rs. 18,50,00,000/- ((Rs.15,00,00,000/- in F.Y. 2013-14 & Rs.1,50,00,000/-(for the F.Y. 2014-15 from seized documents at page no. 93) and Rs.2,00,00,000/- already shown in the books of the assessee as unsecured loan in F.Y. 2014-15)] in any of the following FYs and not repaid the loan also till the passing assessment order. Considering the general practice and convention of the a business scenario, the contention of the assessee is not tenable. The entire submission of the assesse is only an afterthought to escape from tax liability by retracting the statement given during the course of search proceedings. The Hon'ble Rajasthan High Court has ordered in D.B. Income Tax Appeal No. 67/2002 in the case of Commissioner of Income Tax, Bikaner versus Shri Ravi Mathur, A-8, Shyam Nagar, Jaipur regarding retraction of surrendered amount. 18 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT Considering these facts, it is evident that the assessee is disputing only some part of the transaction which are received by the assessee on behalf of him for the benefit of him as a contribution on behalf of the assessee in the Navbahart Nirman Co. JV. However, it is observed that this transaction is not separate. Only the route of receiveing the amount is made indirect. This amount is received as loan. Similar loan of Rs. 2,00,000/- was received by the assessee which is offered for taxation by the assessee in the return filed in response to the notice issued u/s 153A accepting that the amount is not required to be returned. Similar is the fact of the transaction of Rs. 16,50,000/-. Hence, the artificial distinction made by the assessee is not found to be acceptable. The amount as accepted in the statement is corroborated by the books of accounts of the assessee. The addition is based on the basis of seized documents, corroborated by the books of accounts and the statement recorded u/s 132(4) of the Income Tax act. The statement is corroborated by the seized documents which are found from the premise of the assessee and from the premise of the business partner Sh. R. K. Verma in a common search. The admission so made by the assessee is further corroborated by the books of accounts of the assessee. In view of above facts, the argument of the assessee in this regard are not found to be acceptable. 6.7.4 Retraction of statement under oath is not supported by credible evidences The appellant argued that retracted Statement by the assessee is not good evidence In this regard the AO stated in the remand report that the acceptances of both the persons during the search has more strength over the retraction as the acceptances are supported and corroborated with the concrete evidences having more strength than the retraction which is not supported by any thing which could prove that the receipt of the payments by Shri Ajay Bakliwal was not in agreement with the mode explained as agreed for settlement of dispute. The AO stated that Shri Ajay Bakliwal has surrendered Rs. 16.50 crore during the statements recorded u/s 132(4). Afterward he retracted from surrender by filing a letter. The retraction of Shri Ajay Bakliwal and Shri R.K.Verma was a fabricated arrangement to color the accommodated bogus loans. Here it is submitted that the retraction of both are not tenable as it is not supported by anything which could prove that the receipt of the payments by Shri Ajay Bakliwal was not in agreement with the mode explained by both as agreed for settlement of dispute. It is rather proved that payment was accommodated in form of bogus loans. The AO also stressed upon the fact that no interest was paid, no repayment of loan was made till the search 07.09.2017 for this accommodated bogus loan in FY 2013-14 and FY 2014-15. 19 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT The issues raised by the assessee and the AO are considered and it is observed that the loan is not repaid. Interest is also not paid on the amount received by the assessee. In case of genuine loan transaction, there is payment of interest and the loan is repaid. However, in the present case, the loan amount is not repaid and the no interest is being paid. Mr. R. K. Verma has not insisted for repayment of loan and payment of interest on the loan. It is interesting to note that as per seized paper page no. 56 settlement amount of Rs. 20,00,00,000/- and the interest on it was paid by Sh R K Verma. When there was interest payment made earlier by Mr. R. K. Verma to the assessee, there is no reason why interest is not being paid by the assessee. This also confirms that the transaction of loan is bogus and the real transaction is as per settlement. These facts prove that the transactions as per the seized paper and as admitted in the statement recorded u/s 132(4) were correct. In the seized paper also it was mentioned that the laon is not to be repaid unless both parties agree. This is further confirmed from the statement recorded u/s 132(4) of Sh. R. K. Verma and the assessee. The transaction of loan between unrelated parties without any consideration is therefore required to be taxed as per provisions of Income Tax Act. This issue is discussed under different paragraph where the receipt is treated as income from other sources. It is also noted by the AO in the remand report that the entries in seized document page No. 56 are the incriminating transactions in respect of settlement amount of Rs. 20,00,00,000/- and the interest on it which was paid by Sh R K Verma. This was truly explained by him and accepted by Shri Ajay Bakliwal in statements u/s 132(4). It was not mere acceptance but duly explained with the seized documents. He explained that Rs. 7,75,00,000/- received from 11.04.2023 to 17.12.2013, was shown as work receipt in his concern Nav Bharat Nirman Co.(JV). The rest of the transactions not explained and not verified by the assessee from the books of account and bank statements. The assessee failed in verification that these payments were not received in any of bank accounts of Shri Ajay Bakliwal or his concern Nav Bharat Nirman Comapany(JV). The transactions in seized paper no. 56 are the incriminating transactions the assessee was required to verify these transactions from the accounts. However, the assessee has verified only part of the transaction recorded on the seized page. The assessee failed to discharge his onus in respect of transactions other than Rs. 7,75,00,000/- recorded on page no. 56 of Exhibit-17 of Annexure - AS. The AO stated that the assessee in his reply during remand proceeding also did not furnish any explanation with regard to these transactions. 20 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT A search action under section 132 was carried out on 07.08.2017 on the assessee. The transaction with Mr. R. K. Verma was admitted by the assessee in statement u/s 132(4) dated 9-9-2017 when he was confronted with page no. 56 of Exhibit 17 of Annexure AS found from the premise of Sh. R. K. Verma who was partner in JV with the assessee. The appellant is claiming that he retracted from alleged admission made by him vide letter dated 19.12.2019. On perusal of the page no. 138-139 of Common PB, it is observed that this is an affidavit signed by Shri R K Verma. It is printed on stamp paper of Rs. 100/-. In his affidavit it is stated that my statement u/s 132(4) was given under stress, duress and pressure. Further, with regard to payment of Rs. 16.50 Crore to Nav Bharat Nirman Co. (JV) it is stated that the amount was given for business purpose and not for settlement of dispute. The affidavit furnished by the appellant and signed by Mr. R K Vermais analyzed. It is evident that the affidavit is prepared on insistence of the assessee. This is signed by Mr. R K Verma after a period of more than two years. No reason for the delay is explained. Without prejudice to the above issue of delay and not furnishing before the concerned officer, the contents of the affidavit are twisted only for the purpose of saving the assessee. No evidence are furnished to explain the transaction of noted on page no. 56 of Exhibit 17 of Annexure - AS. No business purpose as claimed is demonstrated by documentary evidences either by the assessee or Mr. R K Verma. It is not explained how the seized documents are now being explained. Hence, the affidavit is only assertion without any supporting documents. In the absence of any supporting documents, the retraction is not found to be valid retraction, and the same is rejected. On the issue of retraction of statement recorded during search Hon'ble High Court Of Madras in the case of Thiru. A.J. Ramesh Kumar v. Deputy Commissioner of Income-tax [2022] 139 taxmann.com 190 (Madras) noted as under – x x x x In this case also, affidavit of Sh. R K Verma filed by the appellant in support of his retraction is perused and the same is not found to be acceptable as the retraction was in the form of mere assertion and also belated. There was no material evidence let in by the appellant to retract the statement made under oath during the search proceedings and the affidavits are found to be unreliable as the affidavit is a self-serving testimonies. It has been held that any retraction by the appellant should be made at the earliest point of time with sufficient, credible and corroborative evidence to support his claim and not by mere assertion as done in this case. Therefore, I do not find any reason to differ with the findings so recorded by the AO. 21 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT It is noticed that various judicial authorities have held that a statement u/s.132(4) is an important piece of evidence and though it is open to the assessee to show that the statement under oath was erroneous. Such retraction must be made soon after the recording of the statements on oath and further such retraction should be backed with suitable and sufficient evidence. In this regard, in an important decision Hon'ble Gujrat High Court of in the case of Asstt. CIT v. Hukum chand Jain [2010] 191 Taxman 319 it was held that if an allegation of duress or coercion was made almost after two years, then such allegation has to be overruled. In this case also the allegation is made after 3 months. The ITAT Ahmedabad Bench 'C' in the case of Kantilal C. Shah v. Assistant Commissioner of Income-tax, Circle-3, Ahmedabad [2011] 14 taxmann.com 108 x x x x In this case, the retraction made by the appellant is not found to be reliable because, the statements of the assessee were also recorded u/s 132(4) during the search and the assessee has not brought anything on record. Therefore it indicates that the retraction of the assessee is merely an afterthought. Search proceedings were conducted in presence of two independent witnesses and statement were also recorded in their presence. The statement recorded under oath cannot be brushed on the allegation of pressure in these facts and circumstances. On the issue of retraction Hon’ble High Court of Kerala in the case of CIT vs. O. Abdul Razak [2012] 20 taxmann.com 48 (ker.) held as under:- x x x x In this case also on retraction being filed by assessee, there was a burden cast on assessee to prove retraction or rather disprove admissions made. The assessee failed to prove any thread or coercion and had voluntarily disclosed his income by making statement under oath, it could be said that retraction made by assessee was a self-serving after thought and no reliance could be placed on same to disbelieve clear admissions made in statement recorded under oath. Therefore, additions made on account of admissions made under oath and statement corroborated by documents recovered in search and attendant circumstances is found to be justified. Without prejudice to the above, there is another angle to the admission during the search and retraction during assessment proceedings. By admitting the appellant during search and survey proceedings the assessee stopped further investigation by the investigation wing. The assessee prevented department to cause further enquiry in his case. Since, the appellant admitted that the amount was received from Shri Ram Kishan Verma and offered it for tax, the department officers stopped further enquiry. As such law of estoppels applies in this case. In 22 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT such circumstances, it is against the principles of law if retraction letter is furnished before the AO during the assessment proceedings is considered. It is not the case that the admission made by assessee was incorrect or there is mistake or the admission was made on wrong facts. In fact, when there is a clear admission, voluntarily made, by the assessee, that would constitute a good piece of evidence. Hence, the reliance placed by the appellant on the afiidavit of Sh. R K Verma is not found to be acceptable. 6.7.5 Retraction from statement is not valid as the statement of the assessee during search is proved to be voluntary The facts of the case are considered. The assessee has again and again arguing that the statement was recorded under pressure. The argument of the appellant is not found to be acceptable from the fact that during the course of search action the language of the statement establish that the facts which were in exclusive knowledge of the assessee and Sh. R K Verma were admitted. Hon'ble Supreme Court in the case of R S Sarwan Singh V State Of Punjab AIR 1957 SC 637 held that confession may be treated as voluntary, that by itself may not suffice. For accepting it as valid evidence, it is necessary to establish that it is true. For this confession has to be evaluated w.r.t. rest of the evidence and the probability of the case. It is not a requirement that independent corroboration should cover all aspects. As per the guiding principles of Hon'ble Supreme Court, the statement recorded u/s 132(4) is correlated with rest of the evidence and it is found and admitted by the assessee that as per page no. 56 of Exhibit-17 of Annexure - AS there was transaction of Rs. 7,75,00,000/- received from 11.04.2013 to 17.12.2013, was shown as work receipt in his concern Nav Bharat Nirman Co.(JV). This fact is not disputed by the assessee even after retraction. The assessee has therefore accepting part of the incriminating document and denying the transactions which are not explained. As held by the Hon'ble Supreme Court it is not a requirement that independent corroboration should cover all aspects. The remaining transactions are admitted by the assessee in the statement recorded u/s 132(4) as payment received for settlement of dispute. The assessee is now not accepting the remaining transactions. On these facts, the probability of the case establish that all the transactions as recorded on the seized paper are true and the retraction is only afterthought to avoid tax liability. 23 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT Hence, the arguments of the assessee with regard to retraction of statement because the statement was recorded under duress or pressure are not found to be valid. It is seen that the statement recorded during the search was recorded in parts. The assessee has been allowed break at 12.05 PM on 7.09.2017. Statement was not recorded thereafter on 7-09-2017. Again the assessee was allowed to take rest at 11.30 PM on 7.09.2017. The statement was resumed on 8-09-2017 at 10.05 AM. There was sufficient time for break and rest. Again the statement was paused at 1,30 PM on 8-09-2017. The assessee was allowed to take rest at 3.00 PM on 8-09-2017. The statement was resumed at 5.00 PM on 8-09-2017. Considering these facts, it can be presumed that the assessee was allowed to take rest during the statement. Even otherwise, continuous recording statement is not required for recording a statement of 32 Pages during a period of 4 days (from 7-09-2017 to 10.09.2017). The assessee has admitted voluntarily in response to the question no. 15. In the question no. 16, the assessee was again provided opportunity for explaining the admission. The assessee again admitted in response to question no. 16 that the reply given in response to question no. 15 was given after understanding well. It was reiterated that the amount of Rs. 16.50 Crore was not unsecured loan but income related to dissolution of J.V. with sh. R. K. Verma. He reiterated that he has surrendered this undisclosed income voluntarily. No evidence of duress or pressure is proved as per the statement recorded during search. In the end of the statement this fact is specifically mentioned. It is noted that this statement is given by the assessee, without any intoxication, duress, threat or inducement. The assessee has signed the statement in the presence of two witnesses. Coming to the letter for retraction filed before the AO, it is seen that the letter for retracton is claimed to be filed on 20th August along with an affidavit without any date. There is no evidence that the letter was filed on 20th August or later as no stamp of the office of the AO is visible. The date of stamping on affidavit prepared on the Rs. 100 stamp is 25th July, 2018. The affidavit is not notarized. No independent person is witness of the assessee that he has signed this affidavit. The statement recorded under oath is sought to be retracted by an affidavit after a period of almost one year. The reason for such delay is not explained with evidences. The new documents or evidences have been relied upon for retraction. Hence, the retraction letter is not found to be acceptable evidence. 24 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT In the retraction letter it is reiterated that the amount received from Sh. R. K. Verma is in fact loan in the books of Joint Venture M/s Navbharat Nirman Company. In the statement recorded u/s 132(4) it was admitted to be contribution on behalf of Sh. Ajay Bakliwal in the JV. The facts remains same as these were in the search proceedings while the statement was being recorded. The assessee is trying to twist the explanation. However, the facts remains that as per the seized document and as per the statement recorded u/s 132(4) the amount was not required to be returned. What is the fact at present. The amount is still not returned. Hence, the appellant has got the amount of Rs. 16,50,000/- from Sh. R. K. Verma without any consideration. This amount is not offered for taxation in the return of income filed. Therefore, the retraction is not found to be acceptable and rejected. Hence, the retraction made without any supporting evidence is not found to be acceptable and rejected. 6.7.6 The Statement recorded u/s 132(4) have great evidentiary value The admission made by the assessee in the statement recorded during the search u/s 132(4) from 7.09.2017 to 9.09.2017 was not retracted immediately. The statement is retracted by letter dated 20th August 2018. There is no acknowledgement to show that the letter was furnished in the office of DCIT, Central Circle, Kota. The affidavit enclosed with the letter is stamped on 15th July, 2018. The affidavit is not notarized. The affidavit is not supported by any independent witness. The assessee has twisted the facts to suit the requirement of the assessee. In these circumstances, it cannot be said that there was valid retraction filed by the assessee. The statement is corroborated by other evidences like the statement of Sh. R.K. Verma recorded u/s 132(4) and the seized documents. The assessee claimed that the statement was under pressure. It is also claimed that the appellant could not get opportunity to examine the amounts admitted from the books of accounts. In the light of facts of the case, the arguments of the appellant are examined. With regard to pressure in search to get unjustified confirmation and coerced surrender no evidence is furnished by the assessee. The allegation so made are general in nature. There is no evidence to prove that which part of the admission was incorrect. No claim was made that who was the particular officer or official who coerced surrender. Explaining legal consequences cannot be treated as coercion. On perusal of the statement recorded during the search dated 7-09- 25 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT 2017 to 10-09-2017 it is noticed that the assessee has taken oath about true statement in the beginning. The reply given by assessee in the statement explains the level of his understanding of the facts. On going through the statement, there is no directed question to make him declare the amount as undisclosed income is found. He was only asked to explain the facts and while explaining the facts, if the transaction was unrecorded the same was offered for taxation. The fact which was in the exclusive knowledge of the assessee was disclosed by him voluntarily. There is no directed question. Therefore, the allegation made by the assessee, that he was under pressure is not found to be true as the statement was found to be as per exclusive knowledge of the assessee. Admission Is Based On \"Special Knowledge is held to be valid in the case of Kantilal C. Shah V Acit [2011] 14 taxmann.com 108 [AHD.-TRIB] A makes a statement relating to facts within his special knowledge and assessment is based on such statement, he should not have any grievance. In case of retraction-time is the essence-retraction after long gap is unacceptable. Retraction which is general in nature, as against the statement which fact based, need to be supported by strong and convincing evidence. It should be clearly demonstrated that earlier statement was obtained under coercion and was fatually incorrect i.r.o each item of admission. The statement was recorded in the presence of two independent witnesses. The appellant has not furnished evidence from these witnesses about the coercion or undue pressure. In these facts allegation of high handedness in search to get unjustified confirmation and coerced surrender is not found to be proved and hence, rejected. The statement recorded u/s 132(4) was under oath. The statement recorded u/s 132(4) have great evidentiary value as held by Hon’ble High Court of Rajasthan in D. B. Income Tax Appeal No. 67/2002 in the case of CIT, Bikaner v. Shri Ravi Mathur, A-8 Shyam Nagar, Jaipur as under:- x x x x This decision is applicable on the facts of the case. In this case the assessee pleads that the statements have been obtained forcefull/by coercion/undue influence then the claim so made should have been supported by strong evidence. Once a statement is recorded under section 132(4), such a statement can be used as a strong evidence against the assessee in assessing the income, the burden lies on the assessee to establish that the admission made in the statements are incorrect/wrong. 26 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT In view of above observations, it is concluded that the admission by the appellant is based on the seized documents and not in air. There are corroborative material in the form of seized documents, the transactions admitted by the appellant himself proves that the amount received from Sh. R. K. Verma is receipt of money without any consideration. In this regard the decision of Hon'ble Rajasthan High Court is applicable. High Court Of Judicature For Rajasthan Bench At Jaipur D. B. held in Income Tax Appeal No. 47/2018 in the case of Pr. Commissioner of Income Tax (Central), Jaipur Versus Shri Roshan Lal Sancheti, Prateek-13, Milan Talkies Road, Ashok Nagar, Hari Sewa Marg. Bhilwara (Raj.) dated 30/10/2018 as under- x x x x In this case, facts are similar or more against the appellant. The statement recorded u/s 132(4) cannot be discarded simply by observing that the assessee has retracted the same because such retraction ought to have been generally made within reasonable time or by filing complaint to superior authorities or otherwise brought to notice of the higher officials by filing duly sworn affidavit or statement supported by convincing evidence. In the present case, the statement is not retracted within reasonable time, no evidence of filing complaint to superior authorities have been furnished, there is no supporting affidavit to disprove that the statement recorded u/s 132(4) was not correct. In fact, the statement recorded u/s 132(4) is still proved on the facts of the case. It is notable that Hon'ble Supreme Court Of India in the case of Roshan Lal Sanchiti v. Principal Commissioner of Income-tax Hon'ble [2023] 150 taxmann.com 228 (SC)/[2023] 292 Taxman 549 (SC)/[2023] 452 ITR 229 (SC)[28-11-2022] dismissed the SLP against the decision oh Hon'ble High Court. The head notes of the decision are as under- x x x x Hon'ble Supreme Court Of India in the case of Bannalal Jat Constructions (P.) Ltd. v. Assistant Commissioner of Income-tax [2019] 106 taxmann.com 128 (SC)/[2019] 264 Taxman 5 (SC)[08-04-2019] held that Where High Court upheld addition made by authorities below relying upon statement made in course of search proceedings by director of assessee company, since assessee failed to discharge its burden that admission made by director in his statement was wrong and said statement was recorded under duress and coercion, SLP filed against decision of High Court was to be dismissed. The head notes of the decision are as under- x x x x In the present case also in course of search proceedings, statement of assessee was recorded under section 132(4) admitting certain undisclosed income. Subsequently, assessee retracted said statement. In course of 27 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT assessment, Assessing Officer made addition to assessee's income on basis of statement given by the assessee. It is a fact that statement had been recorded in presence of independent witness. Therefore, mere fact that the assessee retracted statement at later point of time could not make said statement unacceptable. The burden lay on assessee to show that admission made by him in his statement was wrong and such retraction had to be supported by a strong evidence showing that earlier statement was recorded under duress and coercion. The assessee in the present case has not furnished any evidence of duress and coercion though alleged in the letter claimed to be furnished as retraction letter. The assessee failed to show that admission made by him in his statement was wrong. Therefore, the retraction letter furnished by the assessee is found to be unacceptable and considered as an afterthought only. In view of above discussion, the addition made by the AO on account of Rs. 16.5 Crore received from Sh. R. K Verma which is based on the admission of the assessee in the statement recorded u/s 132(4) based on seized documents and further corroborated by the statement of Sh. R. K. Verma, partner of Joint Venture is found to be justified and upheld. 6.7.7 The amount added by the AO is sustained u/s 56(2)(vii) The assessee objected on the addition made by the AO u/s 41(1) as cessation of liability. Considering the facts of the case during the appellate proceedings show cause notice was issued to the appellant vide dated 12.07.2024. It is observed that the assessee received an amount of Rs.15 cr. in AY 2014-15 without any consideration. The assessee was asked to explain why the addition should not be sustained as income from other sources as per provision of section 56(2)(vii) of the Income Tax Act. Since, the addition is now being confirmed as per provisions of section 56(2)(vii) of the Income Tax Act, the arguments with regard to non applicability of section 41(1) are not found to be relevant. In the reply the appellant stated during the appellate proceedings dated 19.07.2024 that the total amount of Rs. 16,50,00,000/- was received by M/s Nav Bharat Nirman Co. (JV) as loan and the same has been accordingly shown in it's books and is reflected in it's balance sheets filed for the A.Y. 2014-15 & 2015-16 respectively However, during the course of search that took place at the premises of the lender (Shri R.K. Verma) on 07.09.2017, the lender, in reply to Q.No.32 with regard to Page-56 of Exhibit 17 of Annexure AS, under some mistaken belief, deposed u/s 132(4) that that the payment of the amounts mentioned therein has been made to 28 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT Shri Ajay Bakliwal, through cheques, on different dates, which has been shown in his books as Loans & Advances. He further deposed that the payment was made to settle some dispute with regard to the JV (Mis Vinamra Enterprises & Navbharat Nirman Co.) which was formed for construction of flats under Affordable Housing Scheme at Kansua, Kota, for which an amount of Rs.20 crores was fixed, which has been paid along with interest to Shri Bakliwal, and the said document is a description of part payments made in this regard. On the basis of the above referred Page No. 56 and the statements of Shri R.K.Verma, the assessee was made to depose that an amount of Rs. 16.5 crores mentioned in this paper is towards settlement of dispute, in contrast to the evidence stated in the preceding paragraph and was made to surrender the same. It would also be pertinent to mention that the assessee was made to surrender the amount without affording him an opportunity to verify the entries from his bank account/books of accounts. The facts of the case are evident. Sh. R. K. Verma has given the amount to M/s Nav Bharat Nirman Co. (JV) as a contribution on behalf of Sh. Ajay Bakliwal as agreed between them. In essence, the amount given by Sh. R. K. Verma was as per directions of Sh. Ajay Bakliwal, the assessee. The assessee has received some of the amount in his account, some account in the account of the JV as contribution on behalf of him. Hence, the assessee is the rela beneficiary. This fact is proved from the seized documents and the statements recorded u/s 132(4). Hence, the argument in this regard are not found to be acceptable. It is stated that the retum for AY 2014-15 filed by M/s Nav Bharat Nirman Co. (JV) was selected for acrutiny for verification of large unsecured loan taken during the year. This assessment was completed us 143(3) by the ITO, Ward-1(1), Kota on 24.06.2016 and the loan was accepted as genuine. The assessee's submission is that the addition in his hands is incorrect and the same, if at all it was warranted, should have been made in the hands of the AOP, of which the assessee is also a member. He is not denying the tax liability on account of the impugned amount. His only submission is that it should be taxed in the hands of the right person. It is the AOP, which has taken the loan and if at all, any benefit accrued on account of the loan being waived off by the lender (as held by the AD to be remission of liability u/s 41(1) of the Income Tax Act), it accrues to the AOP and not the assessee in his individual capacity. The assessment order referred was made before the search in the case of M/s Nav Bharat Nirman Co. (JV). The AO was not having any knowledge or documents and the statement recorded during the search. Further, as held earlier, the assessee is real beneficiary, hence, the appellant has to be taxed and not the JV. The amount is given by Sh. R. K. Verma to the JV is without any consideration. As per the seized document, the amount is not to be returned and no interest will be charged on such loan. This is as per the directions of the assessee, on behalf of 29 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT the assessee and for the benefit of the assessee. In these circumstances, arguments of the assessee are not found to be acceptable. The action of AO in making addition in the hands of the It is argued that the power to change the section under which an addition has been made, has not been conferred by the statute. This issue is outside the scope of the power conferred on the CIT(A) The assessee placed reliance on the decision of ITAT, Chennai in the case of Sakar Jayalakshmi vs. ITO, in I.T.A. No. 20/Chny/2021. The assessee placed reliance on the decision of ITAT, Delhi in the case of Toffee Agricultural Farms Pvt. Ltd. vs. ITO in ITA No 4903/Del/2021 The arguments of the appellant are considered. The scope of powers of the AAC has been explained by the Hon'ble Supreme Court in a number of cases. In particular, the Hon'ble Supreme Court in the case of CIT v. McMillan & Co. [1958] 33 ITR 182, 193 has quoted, with approval, the observations of Justice Chagla in Narrondas Manordass v. CIT [1957] 31 ITR 909 (Bom.) as under:- x x x x The Hon'ble Punjab & Haryana High Court in the case of Dalmia Dadri Cement Ltd. v. CIT [1973] 90 ITR 297, after referring to the decision of Hon'ble Supreme Court in the case of McMillan & Co. (supra) held that if a mistake has been committed by the Assessing Officer in the Assessment order, which has been discovered by him during the pendency of appeal before the AAC, then the ITO alone was not entitled to rectify the error but the AAC has also the jurisdiction to rectify the mistake in the assessment order. In the present case also, it is noticed that the addition made by the AO is sustainable but not found to be proper u/s 41(1). Hence, the addition is being made u/s 56(2)(vii) of the Income Tax Act. High Court Of Madras in the case of Dr. K. Nedunchezhian Vs. Deputy Commissioner of Income-tax [2006] 153 Taxman 183 (Madras)/[2005] 274 ITR 37 (Madras)/[2005] 199 CTR 301 (Madras) [27-01-2005] held as under- x x x x Relying on the above decisions and as per the Provisions of Income Tax Act, it is held that the Commissioner (Appeals) has been vested with sufficient powers to decide the appeal on the merits on all aspects in order to render justice by virtue of exercise of the appellate power vested with him. The ITAT Pune Bench ‘A’ in the case of Naresh Sunderlal Chug vs. ITO, Ward 8(1) Pune [2018] 93 taxman.com 485 (Pune-Trib.)/[2018] 171 ITD 116 (Pune-Trib.) [12.04.2018] held as under:- x x x x As held in the above order, the powers of CIT(A) are conterminous with the power of Assessing Officer. In other words, the CIT(A) has wide power while 30 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT deciding the appeal. Hence, the argument of the appellant are not found to be acceptable. As per Clause(2) of Section 251 of the Act, it is provided that the CIT(A) shall not enhance an assessment or a penalty or reduce the amount of refund, unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction. The Explanation talks about the power of CIT(A) in deciding the appeal and stresses that he may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the CIT (A) by the appellant. In view of the said provisions, the CIT (A) has power to decide any matter arising out of the proceedings but the said power has to be exercised after giving reasonable opportunity to the assessee to show cause against such enhancement or reduction. In the present case, the appellant has been provided reasonable opportunity of showing cause against the change being made. Therefore, no prejudice is caused to the assessee as reasonable opportunity has been provided. In view of the above discussion, the objection raised by the appellant with regard to powers of the CIT(A) are not found to be acceptable. It is argued that from the cash book and bank account of the assessee, it is evident that he has not received any amount during the year, as alleged. All these evidences show that the receipt of the impugned amount was in the hands of AOP and not the assessee. The arguments of the appellant are not acceptable considering the facts of the case. It is established fact that the apparent is not the real fact. The real transaction is as per the seized document found from the premises of the assessee and the premises of Sh. R. K. Verma. The dissolution deed of one Joint Venture(JV) in which the assessee and Sh. R. K. Verma were participans was found and seized from the premises of the assessee. In the process of dissolution, Sh. R. K. Verma was required to pay certain amounts to the assessee. The amount was paid by Sh. R. K. Verma. Part of the amount is received by the assessee in its properitory concern. Part of the amount is received in the capacity of individual. The major part was received by the assessee as a loan. This loan was only an accommodation entry as it was considered as contribution on behalf of the assessee in its another JV in the name of M/s Nav Bharat Nirman Co. (JV). All these transactions were as per the directions of the assessee, on behalf of the assesee and for the benefit of the assessee. The assessee is the beneficiary in all these transactions. Hence, the income is to be assessed in the hands of the assessee and not in the hands of the JV as it is only the medium to receive money for the benefit of the assessee. 31 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT It is argued that the provision of Section 56(2)(vii) was introduced in the Income Tax Act to curb the practice of individuals and entities receiving gifts in order to avoid tax liabilities. The arguments of the appellant are considered. Before discussing the arguments of the assessee, the provision as provided in the Income Tax Act is to be referred. Section 56(2)(vii) read as under- \"Income from other sources. 45 56. (1) Income of every kind which is not to be excluded from the total income under this Act shall be chargeable to income-tax under the head \"Income from other sources\", if it is not chargeable to income-tax under any of the heads specified in section 14, items A to E. (2) In particular, and without prejudice to the generality of the provisions of sub- section (1). the following incomes, shall be chargeable to income-tax under the head \"Income from other sources\", namely ………………… where an individual or a Hindu undivided family receives, in any previous year, from (vii) any person or persons on or after the 1st day of October, 2009 61 [but before the 1st day of April, 2017],- (a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum; 62 [(b) any immovable property.- (i) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property: for a consideration which is less than the stamp duty value of the (ii) property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration: Provided that where the date of the agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement may be taken for the purposes of this sub-clause: Provided further that the said proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by any mode other than cash on or before the date of the agreement for the transfer of such immovable property:] 32 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT (c) any property, other than immovable property,- (i) without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property; (ii) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration: Provided that where the stamp duty value of immovable property as referred to in sub-clause (b) is disputed by the assessee on grounds mentioned in sub-section (2) of section 50C, the Assessing Officer may refer the valuation of such property to a Valuation Officer, and the provisions of section 500 and sub-section (15) of section 155 shall, as far as may be, apply in relation to the stamp duty value of such property for the purpose of sub-clause (b) as they apply for valuation of capital asset under those sections: Provided further that this clause shall not apply to any sum of money or any property received- (a) from any relative; or (b) on the occasion of the marriage of the individual; or (c) under a will or by way of inheritance; or (d) in contemplation of death of the payer or donor, as the case may be; or (e) from any local authority as defined in the Explanation to clause (20) of section 10; or from any fund or foundation or university or other educational (f) institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10; or (g) from any trust or institution registered under 63[ section 12AA or section 12AB]: 64 [or] 64 by way of transaction not regarded as transfer under clause (vicb) or ((h) clause (vid) or clause (vii) of section 47.] Explanation-For the purposes of this clause,- 33 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT (a) \"assessable\" shall have the meaning assigned to it in the Explanation 2 to sub- section (2) of section 50C; \"Yair market value of a property, other than an immovable property, (b) means the value determined in accordance with the method as may be prescribed (c) Jewellery shall have the meaning assigned to it in the Explanation to sub-clause (i) of clause (14) of section 2: \"property means the following capital asset of the assessee, namely:-] (d) (1) immovable property being land or building or both; shares and securities; (i) jewellery, (iv) archaeological collections: (v) drawings, (vi) paintings; (vi) sculptures; 67 (vii) any work of art, for] (xi) bullion; (ix) \"relative\" means- [(e) (i) in case of an individual- (A) spouse of the individual; (B) brother or sister of the individual; (C) brother or sister of the spouse of the individual; (D) brother or sister of either of the parents of the individual; (E) any lineal ascendant or descendant of the individual; (F) any lineal ascendant or descendant of the spouse of the individual; (G) spouse of the person referred to in items (B) to (F); and (ii) in case of a Hindu undivided family, any member thereof;] \"stamp duty value\" means the value adopted or assessed or assessable by any authority of the Central Government or a State Government for the purpose of payment of stamp duty in respect of an immovable property:] (1) 71 where a firm or a company not being a company in which the public are substantially interested, receives, in any previous year, from any person or persons, vila) on or after the 1st day of June, 201073[but before the 1st day of 34 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT April, 2017), any property, being shares of a company not being a company in which the public are substantially interested,- without 72consideration, the aggregate fair market value of which exceeds fifty (1) thousand rupees, the whole of the aggregate fair market value of such property, for a consideration which is less than the aggregate fair market value of the (ii) property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration: Provided that this clause shall not apply to any such property received by way of a transaction not regarded as transfer under clause (via) or clause (vic) or clause (vicb) or clause (vid) or clause (vii) of section 47. Explanation. For the purposes of this clause, \"fair market value of a property, being shares of a company not being a company in which the public are substantially interested, shall have the meaning assigned to it in the Explanation to clause (vii):]\" As per the provision, where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009 [but before the 1st day of April, 2017] any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum shall be chargeable to income-tax under the head \"Income from other sources\". In the present case, -the assessee is an individual, -the amount is received between the period mentioned i.e. after the 1st day of October, 2009 but before the 1st day of April, 2017, sum of money is received without consideration, - the aggregate value of such sum exceeds fifty thousand rupees Hence, all the ingredients are found to be present in the case of the assessee. Hence, the case of the assessee is covered by the provisions of section 56(2)(vii). The appellant argued that this section was introduced to curb the practice of individuals and entities receiving gifts in order to avoid tax liabilities. The argument of the appellant is not acceptable. The correct statement should be that to curb the practice of bogus transactions shown as gifts this provision is introduced. The persons involved were paying cash to other persons for getting entry of cheque amount in their bank account in the name of gift without paying tax. Therefore, to curb the bogus transactions this provision was introduced. The genuine gifts by relatives are still out of the perview of the section as per the provision to the 35 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT section. Hence, the transaction should not be confused as gift. Genuine gifts are already excluded from this provision. This is a case where sum of money is received by the assessee without consideration. It is argued that the contents of Page-56 of Exhibit 17 of Annexure-AS are discussed. All the amounts stated to be paid by Shri Verma have a date of payment against them and after each payment made, the amounf outstanding thereafter is mentioned. No such date is mentioned against this amount of Rs. 15 crore, which seems to have been inserted after this document had reached finality. Therefore, no cognizance to the reply of Shri Verma to Q. No. 33 in respect of this amount can be given. It is being reflected in Page- 93, but then here, Shri Verma has stated that the impugned amount has been transferred to M/s NavBharat Nirman Co.(JV) and it will be taken back, So, the addition suggested/proposed by your honor uls 56(2)(vil) does not get supported either by Shri Verma's statements or by evidence found during search. The transaction is already held that it is not gift. This transaction is transaction of sum of money is received without consideration. The appellant argued that as per page 56. no date is mentioned. The date is corroborated by the AO on the basis of other facts. The assessee accepted that it is reflected in Page- 93. The assessee has not proved that other facts are not related to transaction of this amount of Rs. 16,50,0000/-. The appellant has not proved that this is different transaction than the amount paid to the JV. If different date is proved by the assessee with evidnces brought on record, the same will be taxable in the hands of the assessee in addition to the amount already taxed by the AO Again it has been argued that the amount was transferred to M/s NavBharat Nirman Co. (JV) and it was stated that it will be taken back. On these facts, the doctrine of Pith and substance needs to be applied. What is apparent is not real. Though, the amount is shown as loan in the books of accounts of M/s Nav Bharat Niraman Company (JV) in the name of Sh. R. K. Verma. However, in reality, the JV is not paying it back. In fact it is not to be repaid. This fact was accepted as per seized documents by the assessee and also Shri R. K. Verma during the search in theie respective statements. The facts after the search also prove that this amount is not returned to Sh. R. K. verma by the assessee or the JV. No interest is being paid by the JV or the assessee to Sh. R. K. verma Similarly, apparently the amount has been given by Sh. R. K. Verma to M/s Nav Bharat Niraman Company (JV) but the amount has been considered as contribution on behalf of the assessee. Hence, the beneficiary of the transaction is assessee. The amount has been given by Sh. R. K. Verma as per the wish and directions of the assessee, on behalf of the assessee, for the benefit of the assessee. Hence, there is no doubt that the assessee has received this amount for the benefit of himself. 36 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT It is argued that Shri Verma never said that he has gifted this money to the assessee. He said that the amount has been paid to resolve the dispute, and thus, it is clear that the payment has not been made voluntarily but under compulsion, so it is not a gift as contemplated u/s 56(2)(vii). Shri Verma, was forced to pay the amount as a consideration for amicable settlement of the dispute. He did not want to be involved in legal warfare, and he chose to settle the dispute out of court and offered certain amount. Had there been no dispute, he would not have given the impugned amount. So, it is under compulsion that the money was paid. It can not be considered as an amount given without any consideration. It is a price paid for settling a dispute by Shri R.K.Verma. So, there exists a quid-pro-quo in this transaction. In a legal context, it refers to a situation where one party provides something of value to another party in exchange for something in return. The amount has not been received without consideration. It is claimed that the assessee did not receive this amount without consideration. However, what was the consideration which was paid is not proved by the assessee. If the consideration paid is proved with documentary evidences, then such consideration is allowable as deduction out of total amount received. However, no such documentary evidence is provided. In the absence of any evidence, it can be presumed that either no consideration is paid or if consideration is given the same was paid out of unaccounted income. In both situations, no deduction can be provided to the assessee. Further, the claim of no consideration paid by the appellant is found to be contradictory claim made by the assessee. It was argued by the appellant that the learned AO has made additions wir.to the statements of the assessee and Shri RK Verma that due to settling some dispute in this joint venture the payments were received bythe assessee from Shri R K Verma. The perusal of the dissolution deed does not disclose any such fact. The Joint venture has been dissolved on 10.04.2015 and there in no reference of any dispute in this Dissolution Deed. The dissolution has been executed amicablyand agreeably Further it is mentioned in the dissolution deed that the joint venture was being wounded up as no foreseeable projectwas pending and works in hand stood completed The dissolutiondeed very specifically mentions in para 3.1 that apart from what isrecorded in the attached Balance Sheet nothing remains to bereceived or paid by one party from or to the other. The learned AO has acted disregarding the facts mentioned in the Dissolution Deed. The dissolution deed does not mention of any dispute and ofpayment by Shri RK Verma to the assessee in settling any suchdispute. The documentary evidence should not have beenoverriden by oral statements. The settled position of law is just thereverse. As per the assessee, the dissolution deed does not mention of any dispute and of payment by Shri R K Verma to the assessee in settling any such dispute. If it is so, the argument of the assessee that there was some consideration paid is 37 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT found to be contradictory to its own arguments. The contradictory claim of the assessee are therefore not found to be acceptable and rejected. It is argued that he statement of both the persons corroborates that the transaction took place in connection with business dispute in Mis Vinamra Enterprises and Navbaharat Nirman Co. (JV). Therefore the nature of transaction is a business receipts. The assessee humbly submits that the assessee has failed to account for the same as his business receipts. It is submitted that the receipts may kindly be considered accordingly as the expenses were also met out of the books. In other words when the receipts are out of books the payment on account of expenses shall also be out of the books. In such circumstances the only way to determineincome is application of NP rate. Therefore in the case of the assessee the following facts emerge, (1)The receipts of Rs. 15.00 Cr. in A Y 2014-2015 and Rs.1,50 Cr. in A Y 2015-16 are business receipts of theassessee (i) The expenses incurred against these receipt is notrecorded in the regular books of account and hence outof books (i) The Income on these receipts may kindly bedetermined by application of NP rate (iv) The NP rate of 3.7% disclosed by the assesseee onregular receipt may be made applicable on thesereceipts also It is submitted that in various judicial pronouncements byHon'ble Courts, it has been held that the Statute provides onlyfor levy of tax on income and not on gross receipts. It iscommon knowledge that expenditure under various heads areincurred during the course of business and the net income isarrived at after deducting the expenditure from the Grossincome. The leamed AO cannot proceed to treat the Gross receipts as what is chargeable to tax under the Income Tax Actis \"income\" and not the 'gross receipts\" The arguments of the assessee are considered but not found to be acceptable. The claim of the appellant are contradictory. The assessee accepts this amount as undisclosed income in the statement recorded u/s 132(4) of the Income Tax Act. After a year the assessee claimed that this amount was not income but loan and not received by the assessee but was received by the JV in which the assessee is partner. Again, the assessee is saying that the receipt was business receipt and claiming that expenditure should be allowed out of these receipts. The claim of the assessee is considered. The assessee has changed his stand many times. Now the assessee is claiming that the amount is taxable receipts. The assessee in the statement also accepted that this amount was 38 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT taxable receipt. Only difference in the claim made now is that the assessee is claiming that the receipt are not net receipts and that he made expenditure for earning of this income. The claim of business receipt is not found to be acceptable as the nature of receipt is not explained with evidences. In the absence of any evidence, the receipt cannot be treated as business receipts. The appallents claim is therefore rejected. The assessee has not furnished any evidence of making expenditure to get this amount from Sh. R. K. Verma. In the absence of any evidence, no expenditure is allowable. The expenditure which are made wholly and exclusively for earning income can be allowed as expenditure. However, the assessee is required to prove that the expenditure is either made from the explained sources of Income or the expenditure should have been made out of the receipts which are being taxed. The appellant has failed on both the counts here. Firstly, the expenditure is not proved to be out of explained sources. Secondly, the receipt is utilized by the assessee for its own purpose and no expenditure is made out of these receipts which can be attributed for earning of these receipts. In the absence of failure to prove that any expenditure was made out of these receipts, two possibilities arise- First possibility is that no expenditure was made by the assessee. Second possibility is that the expenditure was made out of unexplained sources. The assessee will not get any benefit in both the conditions. If no expenditure is made, there is no question of allowing the same. If the expenditure is made out of unexplained sources, the expenditure so made needs to be taxed u/s 69C of the Income Tax Act as unexplained expenses. The assessee has not explained in which category he is falling. No evidences in support of the expenses are made available. Hence, the claims made by the assessee are not found to be acceptable. Without prejudice to the above, the assessee has also received Rs. 3,50,00,000/- from Sh. R. K. Verma. This amount is part of the gross amount received by the assessee. However, this amount was received by the assessee directly. This amount has been offered for taxation during the AY 2017-18 voluntarily by filing return u/s 153A without claiming any expenditure. If any genuine expenditure was incurred by the assessee, the assessee would have certainly claimed it against the receipt. In the absence of any genuine expenditure incurred, the assessee has offered this amount for taxation without claiming any expenditure. This further confirms the fact that no genuine expenditure was made by the assessee for getting the amount of Rs. 18,50,000/- from Sh. Ram Kishan Verma. Therefore, no expenditure is allowable out of these receipts. It is argued that another important feature of gift is that it is given by the Donor out of his capital. The capital of the donor gets reduced by the corresponding amount of gift. The books of Shri R.K. Verma show that there is no debit to his capital account of the impugned amount. Rather, his balance sheet shows the impugned amount as Loan to JV 39 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT The arguments of the assessee are found to be not relevant. The section 56(2)(vii) do not provide any distinction on the basis of nature of treatment in the books of account by payer or payee. No distinction is made on the basis of further utilization by the receiver. Hence, the arguments raised in this regard are not found to be relevant. 6.7.8 Issue of Cross Examination of Sh. R. K. Verma It is argued that even considering the fact that Page referred by the AO in his order and used against the assesone for making the addition, was recovered thing the course of search the material cannot be used against the assessee without providing him an opportunity for cross examinators of the maker of the document. The argument of the appellant is not found to be acceptable. Sh. R. K. Verma is business partner of the assessee. The transaction in question occurred between them. Both of them were searched as per the provisions of section 132 of the Income Tax act together. The documents related to dissolution of JV of both of them were found from the premises of both the persons. Both of them accepted that the transaction in question was not loan but an accommodation entry against the settlement of dispute. In fact, some of the amounts as per seized paper are accepted and not in dispute. Only parts of the transactions are being disputed to avoid tax liability. It is not permissible under the law. On these facts, the argument of the assessee are not found to be acceptable that he should have been provided opportunity to cross examine Sh. R. K. Verma. Sh. R. K. Verma is/was a business partner of the assessee. Hence, he is witness of the assessee. The fact that on the insistence of the assessee, Sh. R. K. verma furnished an affidavit retracting from the statement recorded u/s 132(4) itself proves that Sh. R. K. verma is witness of the assessee. Furhter, the documents seized from the premise of the assessee, statement recorded of Sh. R. K. Verma were duly shown and confronted with the assessee during the search itself. The assessee has replied to the questions raised in the statement recorded u/s 132(4) after considering the seized material and statement recorded of Sh. R. K. Verma. Hence, the assessee has got ample opportunity to present his case before the AO with regard to statement of Sh. R. K. Verma and the seized documents from the premises of the assessee and from the premises of Sh. R. K. Verma. On these facts, no prejudice is caused to the assessee. The assessee has got opportunity to defend himself as per principles of natural justice. Hence, the arguments in this regard are not found to be acceptable. 6.7.9 The addition made by AO can be sustained on the basis of page 56 The AO in the remand report stated that amount of Rs. 15.00 crores is mentioned on page no. 56 and Shri R K Verma submitted on the basis of transaction recorded on page no. 56 that amount of Rs. 15.00 crores was given for 40 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT settle dispute and dues with the assessee and same has been confirmed by the assessee in his statement recorded u/s 132(4) of the Act. It is worth to mention that date of transaction of Rs. 15.00 crores on page 56 and 93 are different and therefore, it is evident that these are not same transaction. Further, assessee himself admitted that transaction of Rs. 7.75 crores recorded on page no. 56 are related to him and he has accounted for them in his regular books of account which clearly proves that all transactions recorded on page no. 56 are correct and all transaction recorded on page no. 56 are relate to the assessee and part of them are not recorded in regular books of accounts. Therefore, ongoing through page 56, it is evident that assessee has received Rs. 18.00 crores (15.00 +1.00 +0.50 +0.50 +1.00) from Shri R. K. Verma which is different from amount of loan shown on page no. 93 and same has not been recorded in regular books of the assessee and not offered for tax in ITR despite same was accepted during statement recorded u/s 132(4) of the Act. In view of above, it is requested that appropriate action may be taken on this account and addition of Rs. 15.00 crores may be sustained. The seized documents were analysed and it is noticed that for making addition in the hands of the assessee, the seized page no. 56 of AS from the premise of Sh. R. K. Verma is relevant. The seized page no. 93 may be considered as different as the dates mentioned in these transactions are different. The appellant has not proved how these transactions are same. Hence, these transactions may be treated as different. The arguments of the AO are considered. However, no corroborative evidence is available to establish that another transaction has taken place in addition to the transaction on which addition is made by the AO. Therefore, the assessee is given benefit of doubt and no separate addition is made on this issue. This contention of the AO seems to be without prejudice to the other arguments taken by the AO. On the facts of the case, the arguments of the AO are considered and disposed accordingly. From the above discussion, it is evident that the addition made by the AO can be sustained independently relying on the page no. 56 without making reference to the page no. 93. This argument of the AO is found to be logical and acceptable. 6.7.10 The AO has made addition in the correct Hands The AO stated in the remand report that the argument of the assessee in this regard are not having any relation as the payment of settlement money to be given to Shri Ajay Bakliwal under. As per the intent of the seized document having recorded the payment of Rs. 16.50 crore by cheques, \"This amount can be considered as contribution by Shri Ajay Bakliwal......... Here the amount of Rs. 16.50 crore was made contributed from RK Verma to the books of accounts of Nav Bharat Nirman Co. (JV) on behalf of Shri Ajay Bakliwal in the form of Loans. 41 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT Shri R K Verma has discharged only his obligation to make payment to Shri Ajay Bakliwal under settlement of dispute. It was not direct advancing of loan to Nav Bharat Nirman Co. (JV), it was the payment of obligation to Shri Ajay Bakliwal indeed, which was contributed on behalf of Shri Ajay Bakliwal by Sh. R K Verma in accordance of accommodation entries in the form of loan The assessee arguing on the application of fund by Nav Bharat Nirman Co. (JV). The AO stated that it was the receipt of settlement payment which was subject matter of addition. Once received in the form of bogus loan then it may be applied anywhere by the receiver, it has nothing to with the taxation at the stage of receipt. On these facts the argument of the appellant are not found to be acceptable. The AO has correctly taxed it in the hands of the assessee. As the real transaction is between the assessee and Mr. R. K. Verma. The payment shown as bogus loan to the Nav Bharat Nirman Co. (JV) is on the direction of the assessee and on behalf of the assessee. Therefore, it is held that the AO has correctly made the addition in the hands of the assessee. In view of above discussion, the arguments of the appellant are not found to be acceptable. The various decisions relied upon by the appellant are distinguishable on the peculiar facts of the case of the assessee and hence not found to be applicable on the facts of the case of the assessee. The addition made by the AO of Rs. 15,00,00,000/- is found to be justified and confirmed u/s 56(2)(vii) of Income Tax act. This ground of appeal is treated as dismissed. Validity of addition of Rs. 2,65,99,000/- on account of unaccounted cash payment. 7.3 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- In this case, the AO noted that during the course of search action in the case of Sh. Ajay Bakliwal some document were seized from the business premise of Sh. Ajay Kumar Bakliwal which has been inventorised at page no. 6 to 9 of Exhibit 08, Page No. 6 to 9 of exhibit have details of payments of M/s NevajiEstates (P.) Ltd. On these documents payments made to M/s Nevaji Estates (P.) Ltd. is recorded. As per the document seized, part payment has to be made in which (ek number) and part payment has to be made in black. In white Rs. 2,13,90,000/- has to be paid while as per black Rs. 4,80,00,000/- has to be paid. In ek number cost has been taken at 400 whereas as per black cost has beentaken at 885. An amount of Rs. 2,00,00,000/-has been paid in black and Rs. 65,99,000/- has to be 42 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT paid in black. From above it is inferred that an amount of Rs. 2,65,99,000/- (1 crore, 50Lakh, 50Lakh and 65.99 Lakh) have been paid in cash. On perusal of transaction recorded on page above it is clear that an amount ofRs. 2,65,99,000/- have been paid in cash from undisclosed sources. It is inferred that the same must have been paid from unaccounted income of Sh.Ajay Bakliwal on which no tax has been paid and would have never offered for taxation had the income tax search action not been carried out in his case. The assessee stated before the AO that the document seized does not belong to him and related to M/s Milenium Buildhome Pvt Ltd. The AO also noted that in the case of M/s Milenium Buildhome Pvt Ltd, the assessee is saying that the document pages are rough and dump. In his reply the assessee has admitted that an agreement was executed with Newaji State P Ltd to purchase a land in Parvatipuram Kota at the rate of Rs. 400 per sqr ft and paid Rs. 51,11,111/- as first instalment. The reply of the assessee is considered but not found satisfactory. The document was seized from the assessee's premise and it is related to agreement with Newaji Estate P limited. Further as per the agreement assessee agreed to purchase 53,475 sqr ft land at B-1 Parvatipuram, Kota at the rate of Rs. 400 per square for a total consideration of Rs. 2,13,90,000/-. And Rs. 51,11,111/- was paid as first instalment. These figures exactly match with the loose paper noting. The assessee has not denied the fact. As per these loose papers noting payment of Rs. 2,00,00,000/- and Rs.65,99,000/-was made in cash and these payment is not recorded in his books of accounts. Therefore, the payment of Rs. 2,65,99,000/- in cash as mentioned in the loosepaper is added to the total income of the assessee treated as investment fromundisclosed sources u/s 69 and tax is charged as provisions of section 115BBE of the IT Act. The arguments of the appellant are considered but not found to be acceptable. The arguments are discussed and decided as under- 7.3.1 The Addition is made in correct hands The appellant argued that the learned AO has erroneously considered page No 6 to 9 of exhibit 8 in the hands to the asseseee which is a matter between Mis Millenium build Home Pvt Limited and Nevaji Estate Pvt. Limited. These papers required to be considered, if at all, then these should havebeen considered in the hands of M/s Millenium build Home Pvt. Limited only. The argument is that addition if any to be made in the hands of Millenium build Home Pvt Limited as the company has made transaction of property in this case. 43 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT The argument of the appellant are considered. The place from the document was seized was common office of assessee as well as the Company. Hence, it is not the case of the AO that the document was seized exclusively from the office of the Company. The Company is an artificial juristic Person created by operation of law. The cash transactions recorded on seized document can be considered as belonging to the company, if it is entered in the books of accounts of the Company or it is proved beyond doubt by the Director or chief Executive Officer of the Company that the unaccounted transactions were to be recorded in the books of accounts in due course or that the cash recorded is earned by the Company. No such evidences are furnished by the assessee. The assessee has not explained may questions with regard to this transaction. The question which comes in the mind after considering the reply of the assessee are as under - -The transaction are claimed to be belonging to the company. However, why only cheque amount is reflecting in the books of account of the Company? The simple answer to this question is that the Director of the Company has used his unaccounted money for investing in land purchased by the Company. The AO has taxed this amount of unaccounted money which was given by the Director as 'on money' on behalf of the Company. The unaccounted cash was belonging to the assessee. The unaccounted money which was earned by the assessee was not offered for taxation by the assessee. The AO has made addition u/s 69 of the Act. The section read as under- \"Unexplained investments. 69. Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year.\" In the present case, as per the seized paper, there is detail of Payment to M/s Nevaji Estate Pvt Ltd. The payment details are written date wise as per the seized paper page no. 6 and 7 reproduced by the AO in the assessment order. Accordingly as per the seized paper, the assessee has made investment in the name of company which are not recorded in the books of account maintained by him for any source of income, and the assessee has not offered any explanation about the nature and source of the investment of cash amount involved in the transaction. The payments through bank of Rs. 51,11,111/- are recorded in the books of accounts of the Company. This fact is accepted by the assessee. The 44 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT cash of Rs. 2,65,99,000/- was paid in cash. It is claimed that this should be considered in the hands of the assessee. The argument of the appellant is not found to be acceptable because of the simple reason that the assessee has invested the unaccounted money of himself in the name of company. The assessee is having exclusive knowledge of the nature and source of the money which has been invested. The Company has not been informed. There is no entry of this cash in the books of accounts of the Company. This brigs to the second question -Why the cash transaction should not be treated as unaccounted transaction by the assessee which are not actually entered in the books of accounts of the Company? The answer to this question is that the unaccounted transaction is not entered in the books of the Company. Hence, the same should be treated as unaccounted transaction by the assessee. The unaccounted transaction would have to be treated of the Company if it was proved that the Company generated this cash from its unaccounted sources. No such evidence is furnished by the assessee. Hence, th transaction is to be treated as belonging to the assessee as the document is found from the possession of the assessee. It does not make difference that the name of the company is appearing on the paper and the investment is made in the name of the Company. What is important is that who made the investment. The document is seized from the possession of the assessee. Hence, it was incumbent upon the assessee to explain who earned the amount of cash which was paid as 'on money'. In the absence of any verifiable evidence, the assessee is to be considered as the person who made the investment. The assessee failed to prove that the Company made the investment. If the assessee has furnished evidences that the amount of cash paid as. On money' was earned by the Company, then the AO was required to make addition in the hands of the Company. However, in the present facts, the AO has rightly made addition in the hands of the assessee. -Is such cash transactions are in the knowledge of other shareholders and management of the Company? For establishing the fact that unaccounted transaction was pertaining to the Company, the assessee was required to establish that these unaccounted are in the knowledge of other shareholders and management of the Company. No such evidence is furnished by the assessee. In these facts, the transaction is considered of the assessee only. The AO also noted that in the case of M/s Milenium Buildhome Pvt Ltd, the assessee is saying that the document pages are rough and dump. The assessee is Director of the Company. If he is believing that the cash transaction was done by unaccounted income of the Company, the same should have been claimed in the 45 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT assessment of the Company. However, the assessee as Director of the Company is saying that these papers are meaning less and in the capacity of individual is saying these transactions are belonging to the Company. The contradictory stand is not acceptable looking to the transactions of 'On Money proved beyond doubt as per seized documents. 7.3.2 These Papers Prove \"On Money\" paymemt in Transaction of Property It is argued that basically and fundamentally these papers are rough in nature containing a sort of memorandum. Therefore, these are dump papers and dumb papers and did not requireany consideration at all in any hand. It is settled principal of law that a paper which is undatedand which is not signed by the assessee and which does not carry the name of the assessee is to be considered as a rough paper. It is thereforerequested that these pages 7-9 of annexure 8 are rough and dumppapers The assessee has recorded these transactions for record and memory purposes. To this extent the explanation of the assessee is found to be acceptable. These are not dump papers and dumb papers as claimed by the assessee. Dates of the transaction, amount paid in white (through banking channel) or ek number and amount paid in black (cash) is clearly mentioned. Two views are not possible on these entries. The seized documents are clearly giving the meaning to them. The amount paid through banking channel is corroborated by the books of accounts of the Company. Hence, it is to be presumed that cash transaction also took place. This cash was not proved to be given from the books of accounts of the Company. Hence, the same is rightly treated as investment made by the assessee in the name of the Company. There is another party to the transaction of cash. The assessee has not proved that other party has not accepted cash as per the recording made in the seized paper. In these facts, it is proved beyond doubt that the assessee make payment of 'On Money' in the form of cash. 7.3.3 The noting of seized documents are Corroborated by the books of accounts It is argued that an Agreement was made between M/s Millenium build Home Pvt. Limitedand Nevaji Estate Pvt. Limited 90 kenal road, Near Mission Hospital Adarsh Nagar, Kunhadi kota, through director Harish Gurjar A copy ofthe agreement dated 07.12.2012 executed on stamp paper purchased on07.12.2012 duly notarized is available on paper book page No. 145 to 148. As per the agreement the M/s Millennium Build Home P limited agreed topurchase 5941 sq yard ie 53475 sq feet land near B-1, ParwatipuramBundi Road, Kota @ Rs. 400/- per Sq feet for a total consideration of Rs 2,13,90,000- 46 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT Against the total consideration of Rs 2,13,90,000.00 the M/s Millenium Build Home P limited made payments as per agreement as under A Rs. 11,11,111.00 on 17.09.2012 by cheque drawn on PNB B Rs 10,00,000.00 on 21.09.2012 by cheque drawn on PNB C Rs. 30,00,000.00 on 31.10.2012 by cheque drawn on PNB Rs. 51,11,111.00 Balance amount of Rs. 1,62,78,889.00 (Rs. 2,13,90,000/- Rs.51,11,111/-) was to be paid later on up to October 2013 or alternately 10 (Ten), 2 BHK flats to be given, It is submitted that except the amount of Rs, 51,11,111/- which has been by cheque drawn on PNB Kota no further amount has been paid either by cash or cheque(s) During the year under consideration no flat was given as none was constructed. Thus no addition is called for on the account of the agreement between M/s Millenium build Home Pvt. Limited and NevajiEstate Pvt. Limited or wrt the seized papers as annexure 8 It is further submitted that only in FY 2019-20 relating to A Y 2020-21, 2(two) flats have been hand over to Mis Newaji estate P limited and 8(eight) flats are yet to be given. M/s Millenium bulld home P limited has not been able to construct the flats as per time schedule because in themarket of real estate there was great recession and prices slided verysteeply. The M/s Newaji estate P limited also did not insist looking to the market conditions. It is submitted that as per agreement, balance amount of Rs.1,62,78,889/- was to be paid partly on 02.08.2013 as Rs. 1.00 Gr. And partly was to be paid on 31.08.2013. But finally this was not paid, as the alternate mode of paymentby way of flats was agreed 2(two) flats were given in A Y 2020-21. It is stated that all the contents of page No. 6 to 9 of exhibit 8 stand accounted for in the books of Mis Millenium Build Home P Limited in original return of income filed in the normal course of business before thedate of search, hence nothing remains unexplained or incriminatingtherefore no additions was required in the hands of the assessee. In viewof the facts submitted above, the addition made by the leamed AO is totally misplaced, unwarranted and deserves to be deleted. The assessee has admitted that the amount of Rs. 51,11,111/- has been by cheque drawn on PNB Kota by the Company. This amount is also mentioned in the seized document along with cash transactions. The assessee is admitting the 47 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT cheque transaction but not admitting the cash transaction. This is not permissible under the law. Firstly, the paper was found from the possession of the asseee. Hence, it is presumed that the paper was prepared by the assessee. In this paper, cash as well as cheque transactions are recoded. The assessee is accepting the cheque transaction. No evidence in support of denial of cash transaction has been furnished. Hence, the cash transactions are also to be believed as the cheque transaction ocuured as are recorded on the paper. The assessee stated that further transaction of cheque did not happen as recorded in the paper. The assessee himself has explained the reason as the alternate mode of payment by way of flats was agreed. 2 (two) flats were given in AY 2020-21 by the Company. Hence, the future transactions do not effect the acceptability of these seized documents as evidence. The AO has made addition only considering the amount which is noted as received. The amount which was to be paid as black was Rs. 4,80,00,000/- However, the AO was reasonable enugh and has not made addition of this amount. The AO has made addition of Rs. 2,65,99,000/- which was paid. Hence, the addition made by the AO is found to be reasoned and justified as per seized documents. The claim of the assessee is found to be incorrect that all the contents of page No. 6 to 9 of exhibit 8 stand accounted for in the books of M/s Millenium Build Home Pas the cash transaction is not recorded in the books of accounts of the assessee or in the books of accounts of the Company. In view of above discussion, the arguments of the appellant are not found to be acceptable. The various decisions relied upon by the appellant are distinguishable on the peculiar facts of the case of the assessee and hence not found to be applicable on the facts of the case of the assessee. The addition made by the AO of Rs. 2,65,99,000/- is found to be justified and confirmed. This ground of appeal is treated as dismissed. Validity of determined income of Rs. 18,26,85,650/- 8.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- This is general ground without any specific arguments. The assessee has raised specific ground of appeal with regard to additions made by the AO. These specific grounds have been discussed and decided separately. Hence, this general ground is not required to be adjudicated. 48 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT This ground is treated as disposed off. 4. Feeling dissatisfied with the finding so recorded by the ld. CIT(A), the assessee is in this appeal before this tribunal. The assessee challenged that finding on the following grounds: - (i) The Ld.CIT(A) has erred in law as well as on facts in confirming the additions made by the AO. (ii) The Ld. CIT (A) has erred in confirming the action of the A.O. in completing the assessment u/s 153A of the Income tax Act, 1961, notwithstanding the fact that assessment in pursuance of material seized from another assessee ought to have been made u/s 153C, after recording of satisfaction. (iii) The impugned assessment order passed/s 143(3) r.w.s.153A of the Income tax Act, 1961 is void-ab-initio and is jurisdictionally flawed as the said assessment order is based on invalid illegal purported approval u/s 153D by the Addl.CIT(Central), Range-Udaipur, there being no application of mind on the part of authority granting approval. (iv) The Ld. CIT(A) erred in confirming the addition of Rs.15,00,00,000/- made in the assessment order, notwithstanding the fact that in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132, as held by the Hon’ble Supreme Court in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd. (v) The Ld. CIT(A) has erred in confirming the addition of Rs.15,00,00,000/- made in the assessment order, notwithstanding the fact that the very foundation for making the said addition, i.e. the statements of Shri R.K.Verma (from whose premises the incriminating document was found) recorded u/s 132(4), have been retracted by him. (vi) The Ld.CIT(A) has further erred in confirming the addition of Rs.15,00,00,000/- holding it to be taxable as a gift u/s 56(2)(vii) whereas the AO had made the addition holding it to be remission of liability u/s 41(1), notwithstanding the fact that CIT(A) does not have the power to change the section of the addition made by the AO, as held by different judicial forums. (vii) The Ld. CIT (A) erred in confirming the addition of Rs.2,65,99,000/- made by the AO in the hands of the appellant on the basis of Page 6 & 7 of Exhibit-8, 49 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT notwithstanding the fact that these papers belonged to the company M/s Millenium Buildhome Pvt. Ltd., and this fact was stated by at the time of search, in his statements recorded u/s 132(4). (viii) The Appellant craves leave to take additional grounds of appeal before or at the time of hearing of the appeal and/or modify any of the above grounds.” 5. The counsel representing the assessee filed written submission to support the various grounds so raised. The written submission filed by him is reproduced herein under : The appellant respectfully begs to submit following facts and details for your honor’s kind consideration in support of grounds of appeal already filed : Brief facts of the case : Briefly stated the facts of the case are that a search was conducted on 07.09.2017, in the Resonance group of Coaching, Kota, belonging to Shri Ram Kishan Verma. The residence cum business premises of the assessee was also covered simultaneously. During the course of search, certain loose papers were stated to be found from the premises of Shri Ram Kishan Verma, on the basis of which addition of Rs.15,00,00,000/- has been made by the AO. Further, during the course of search at the business premises of the assessee, certain loose papers relating to a concern, Millenium Buildhome Pvt. Ltd. were found. The assessments in the case of Millenium Buildhome Pvt. Ltd. were completed u/s 153C. To justify his action of completing the assessment u/s 153A in case of the assessee, the AO has made an addition of Rs,2,65,99,000/- on the basis of loose papers pertaining to Millenium Buildhome Pvt. Ltd. Both the above additions have been sustained by CIT(A). Submission on the grounds of apeal Ground No. 1 & 2 The Ld.CIT(A) has erred in law as well as on facts in confirming the additions made by the AO. The Ld. CIT (A) has erred in confirming the action of the A.O. in completing the assessment u/s 153A of the Income tax Act, 1961, notwithstanding the fact that assessment in pursuance of material seized from another assessee ought to have been made u/s 153C, after recording of satisfaction. It is a clear mandate of law that in case of unabated assessments, any addition u/s 153A can only be made on the basis of incriminating documents seized from the assessee. It is submitted that for making addition on the basis of 50 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT any material including document found during the course of search at the premises of the third party, the procedure laid down under section 153C of the Act is to be followed. In the instant case, said procedure of law has not been followed by the Assessing Officer and, therefore, the addition cannot be legally sustained. It is an undisputed fact that the documents, viz. Page 56 of Exhibit-17 of Ann.-AS, and Page 93, on the basis of which addition has been made were not found from the premises of the assessee. The AO in his order at Page 2 & 4 has clearly mentioned this fact. Further, the panchnama of search along with inventory of books found and seized in the case of the assessee vouch this fact. Exhibit -17 of Ann.-AS in the case of the assessee contains only 31 pages. The Ld.CIT(A) held that statement of the assessee recorded u/s 132(4) constitutes an incrinating material, and addition was validly made u/s 153A. For this proposition, he placed reliance on the decision of Kerala High Court in the case of CIT vs. St.Francis Clay Décor Tiles. In this case, the Court never said that statement recorded u/s 132(4) constitutes an incriminating material. The common question raised in the above appeal was : (a) Whether on the facts and in the circumstances of the case, is not the Tribunal erroneous in holding that addition in pursuance to notice issued under Section 153A can be made only if incriminating material is found and seized in case where there is also abatement of regular assessment proceedings, and are not, such an approach and the resultant conclusion perverse and uncalled for ? (b) Whether on the facts and in the circumstances of the case and when the Assessing Officer is empowered to assess and reassess income for six prior period assessment years notwithstanding the provisions in sections 139, 147, 148, 149, 151 and 153 is not the above approach of the Tribunal one putting an artificial cap on section 153A ?\" The Hon’ble Court decided the issues observing as under- 22. Therefore, we set aside the order passed by the Tribunal in the above appeals and remand the cases to the Tribunal to re-consider the question raised in these appeals by taking into account the principles laid down in the judgement cited by the Revenue as well as the assessee or any other principles of law laid down by competent courts of law and take a decision on merits in accordance with law. The question thus framed is answered in favour of revenue to the extent indicated above. The Ld.CIT(A) has further relied on the decision of Hon’ble Madras High Court in the case of SRS Mining vs. Union of India (2022) 141 Taxmann.com 272(Madras) to contend that the case was required to be dealt u/s 153A and not u/s 153C. His reliance on the said case is misplaced. In this case, the panchnamas issued contained the name of the firm as well as partners. The relevant observation of the Court is as under- 51 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT 86. We have considered the rival submissions of the parties and find that the panchnamas issued by the respondents in certain cases were in the names of three individuals and in some cases it is even in the name of the firm, apart from the three individuals. The material collected pursuant to the search jointly conducted against the three persons and the firm would not require to be dealt with under Section 153C, but would be under Section 153A of the Act of 1961. It is, however, necessary to clarify that if the material collected in the search against such person is used against other person, then proceeding can be taken under Section 153C of the Act of 1961 and not under Section 153A of the Act of 1961. Whether the material collected in the case of search upon the individuals can be considered in the hands of the firm without following the mandate of Section 153C and in the order under Section 153A of the Act of 1961 would be permissible in law is another issue that requires consideration. Thereby on remand, the assessing authority would examine the issue aforesaid. 87. The issue is answered accordingly and in view of the remand of the case, the issue aforesaid would be considered in the light of the finding given above. In this case, there are separate panchnamas drawn in the names of R.K.Verma and the assessee. There being separate search warrants, and the search having been conducted at two different and distinct premises and not a single panchnama contains the names of both Shri R.K.Verma and Shri Ajay Bakliwal, the case relied by the Ld.CIT(A) is distinguishable. As regards applicability of section 153C for making the impugned addition, the assessee relies on the decision of ITAT, Delhi in the case of Trilok Chand Choudhary vs. ACIT in ITA No.5870/Del./2017 decided on 20.08.2019. The Hon’ble Tribunal has observed- 5.5 We also find that during relevant period, i.e., FY: 2014-15, for using any material found from the premises of the third party during the course of the search in assessment proceeding of the assessee, the Assessing Officer of the third party was required to record satisfaction as the material belong to the assessee in terms of section 153C of the Act and then was required to proceed as per the provisions of section 153C of the Act. In the instant case, it is evident that addition in dispute has been made in the assessment completed under section 153A of the Act. The assessee raised this issue before the Ld. CIT(A), however, the Ld.CIT(A) rejected the arguments of the assessee observing as under: 6.3 Another argument of the appellant, if understood correctly, is that in reference to the document under consideration, the AO ought to have initiated proceedings u/s 153C and that in no case this can be considered u/s 153A. This argument has no legs to stand for the simple reason that it is patently absurd. Undisputedly, a search u/s 132 was conducted in the appellant’s case and therefore, the assessment was to be completed u/s 153A and the Ld. AO was under a statutory obligation to consider entire material irrespective of the place from where it was found (i.e. appellant’s own place or some other place). There cannot be two assessment one u/s 153A and other u/s 153C. In short, the argument of the 52 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT appellant that document seized from the premises of Sh. Ashok Chaudhary cannot be considered u/s 153A is absurd and is accordingly rejected.” 5.6 In our opinion, the finding of the Ld. CIT(A) is not based on correct appreciation of law. The reasoning of the Ld. CIT(A) is that there cannot be two simultaneous assessment under section 153A and other under section 153C of the Act. This reasoning is faulty. The assessment under section 153C could have been made after completion of the assessment under section 153A of the Act. The Act has provided separate provisions for making assessment in case of material found in the course of the search from the premises of the assessee as well as the material found in the course of search at the premises of the third party. The Assessing Officer is required to follow the procedure laid down in the Act for making the assessment and he cannot devise his own procedure for shortcut methods. In our considered opinion, when the case of the assessee is covered under the provision of section 153 of the Act and if reliance is placed on the incriminating material found during the course of search of third-party, then provision of section 153C of the Act would be applicable and have to be adhered to. Thus, in the instant case, the Assessing Officer was required to first complete the proceedings under section 153A in hand, which were initiated by way of notice dated 30/06/2014 and thereafter, he was at liberty to take action under section 153C of the Act for bringing the material found from the premise of Sh. Ashok Chaudhary to tax in the hands of the assessee. The above decision is squarely applicable to the case of the assessee. The assessee further relies on the decision of ITAT, Delhi in the case of Rumneek Bawa vs. CIT in ITA No 3083/Del/2012 wherein it was held that assessment framed u/s. 153A of the Income Tax Act based on material found during search on third party without following the mandate of section 153C of the Income Tax Act is unsustainable in law. The Tribunal held - Undisputedly, the document on the basis of which addition has been made was not recovered from the search upon assessee but from the premises of M/s. Zoom Developers Pvt. Ltd. In such circumstances, assessment should have been framed under section 153C of the Act following the proper procedure as per section 153C of the Act. Having not followed the mandate of section 153C of the Act, Revenue has committed fatal error and on this account assessment is liable to be quashed. In the case of DCIT Vs. Smt. Shivani Mahajan, No.5585/Del/2015 (pronounced on 19.03.2019) an identical question was raised before the Tribunal as under: “9. We have carefully considered the arguments of both the sides and perused the material placed before us. After considering the facts of the case and the rival submissions, we find that in these appeals, the following question arise for our consideration (i) Whether any material found in the search of any person other than the assessee in appeal can be considered in the assessment under 153A of the assessee. The Tribunal after considering arguments of the parties held as under: 53 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT “14. If in relation to any assessment year no incriminating material is found, no addition or disallowance can be made in relation to that year in exercise of power under Section 153 of the Act. Obviously, the reference to the incriminating material in the above decisions of Hon’ble Jurisdictional High Courts in regard to incriminating material found as a result of search of the assessee’s premises and not of any other assessee. The legislature has provided Section 153C, by invoking the same the Revenue can utilize the incriminating material found in the case of search of any other person to the different assessee. Section 153C is reproduced below for ready reference: Assessment of income of any other person. 153C. [Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that, - (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person][and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person [for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and] for the relevant assessment year or years referred to in subsection (1) of section 153A]:]. “15. Thus, when during the course of search of an assessee any books, document or money, bullion, jewellery etc. is found which relates to a person other than the person searched, then the Assessing Officer of the person searched shall hand over such books of account, documents, or valuables to the Assessing Officer of such other person and thereafter, the Assessing Officer of such other person can proceed against such other person. However, in the case under appeal before us, admittedly, Section 153C is not invoked in the case of the assessee and the assessment is framed under Section 153A. We, respectfully following the above decisions of Hon’ble Jurisdictional High Court, hold that during the course of assessment under Section 153A, the incriminating material, if any, found during the course of search of the assessee only can be utilized and not the material found in the search of any other person.” On the basis of the above facts and the legal position, the assessment may kindly be quashed. Ground No.3 The impugned assessment order passed/s 143(3) r.w.s.153A of the Income tax Act, 1961 is void-ab-initio and is jurisdictionally flawed as the said 54 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT assessment order is based on invalid illegal purported approval u/s 153D by the Addl.CIT (Central), Range-Udaipur, there being no application of mind on the part of authority granting approval. – Not pressed Ground No.4 & 5 The Ld. CIT(A) erred in confirming the addition of Rs.15,00,00,000/- made in the assessment order, notwithstanding the fact that in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132, as held by the Hon’ble Supreme Court in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd. The Ld. CIT(A) has erred in confirming the addition of Rs.15,00,00,000/- made in the assessment order, notwithstanding the fact that the very foundation for making the said addition, i.e. the statements of Shri R.K.Verma (from whose premises the incriminating document was found) recorded u/s 132(4), have been retracted by him. In submission to Ground No.1, it has been made clear that the incriminating material (page-56 and 93) were not found from the premises of the assessee. For making addition u/s 153A in case of unabated/completed assessments, incriminating material is must. Reliance is placed on the decision of the Hon’ble Calcutta High Court in the case of PCIT vs. Salasar Stock Broking Limited (ITA No.264 of 2016) dated 24.08.2016 and the judgment in the case of CIT vs. Veerprabhu Marketing Ltd. [2016] 73 taxmann.com 149 (Calcutta) in which it is held that, incriminating material is a prerequisite for making additions in assessment u/s 153A/143(3) of the Act, wherever assessments have not abated. It has been held by the Hon’ble Supreme Court in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd. 13. For the reasons stated hereinabove, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra) and the decisions of the other High Courts taking the view that no addition can be made in respect of the completed assessments in absence of any incriminating material. It is submitted that the assessee was made to surrender an amount of Rs.15,00,00,000/- on the basis of loose paper found at the residence of Shri R.K.Verma. This paper was shown to the assessee and he was told that Shri Verma had deposed that this payment has been made after some dispute that arose in the JV Vinamra Enterprises & Nav Bharat Nirman Co. The Authorised officer told the assessee that Mr. Verma has deposed that the amounts stated in the loose paper being against settlement of dispute, will not be taken back and if he surrenders this amount, he will stand to gain by paying only 30% tax on the disputed amount by using the sworn statements of Shri Verma, to his advantage. The assessee under misrepresentation from the search team, surrendered the impugned amount. Later, Shri Verma, filed an affidavit that the statements w.r.t. 55 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT Rs.16.5 crores being paid against settlement of dispute was given under stress, duress and pressure. The assessee too, filed an affidavit, retracting the surrender made, and therefore, the very basis of making the addition in the hands of the assessee, vanished. It may be mentioned that the statements of the assessee recorded by the Authorized officer u/s 132(4) were retracted by him by filing a detailed affidavit. Cogent and sufficient material was placed on record for retraction. So, no reliance can be placed on such statements for making an addition. It has been held by the Hon’ble Andhra Pradesh High Court in case of Commissioner of Income Tax vs. Naresh Kumar Agarwal that if the disclosure made by the assessee u/s 132(4) has been retracted by him, any addition made by placing reliance on the same is unjustified and illegal. In yet another important decision in Commissioner of Income Tax vs. Sunil Aggarwal, Delhi High Court, observed that where the assessee did not simply retract the statement made by him during the course of surrender, but also offered an explanation on the issue of surrender with reference to the entries in the books of accounts, the addition made by the AO was not justified. In the case of CIT Vs Shri Ram Das Motors Transport (1999) 238 ITR 177 (A.P.), the Court held that a mere confessional statement without there being any documentary proof shall not be used in evidence against the person who made such statement. The assessee would finally like to place reliance on the decision of Jurisdictional Jaipur ITAT in the case of ACIT vs. Devendra Kumar Choudhary (ITA No.828/JP/16), where in exactly identical circumstances, the Tribunal dismissed the appeal filed by the Revenue and confirmed the order of CIT(A) of deleting the addition, after duly taking into consideration the decision of Hon’ble Jurisdictional High Court in the case of Ravi Mathur. Ground No.6 The Ld.CIT(A) has further erred in confirming the addition of Rs.15,00,00,000/- holding it to be taxable as a gift u/s 56(2)(vii) whereas the AO had made the addition holding it to be remission of liability u/s 41(1), notwithstanding the fact that CIT(A) does not have the power to change the section of the addition made by the AO, as held by different judicial forums. As already stated supra, certain loose papers were stated to be found from the residence of Shri R.K. Verma during the search. Shri Verma was asked to explain one of these papers, viz. Page 56 of Exhibit-17 of Ann.-AS, during the course of his statements recorded u/s section 132(4). This paper was later confronted to the assessee and he was asked to explain the same. He was told that Shri Verma has deposed in his statements that this amount was paid by him as compensation to settle a business dispute, which arose between Shri Verma and the assessee in respect of their joint venture. The assessee was thus made to surrender the impugned amount of Rs. 15 crores for the relevant year. In his statements recorded u/s 132(4) as well as during the assessment proceedings, it was told that the amount of Rs.15 crores has been shown as Unsecured loan in the books of Navbharat Nirman Co.(JV) Page-93 which has been made a part of the order by the AO, vouches the fact that the money has been advanced by Shri R.K.Verma to Navbharat Nirman Co.(JV) as a loan. The 56 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT assessment of Navbharat Nirman Co.(JV) for AY 2014-15 had been completed u/s 143(3) and the said loan has been accepted as genuine. The CIT(A) has held that the AO has relied on page-56 for making the addition. The AO did not any attempt to reconcile the paper found (page-56) with the books of Shri Ram Kishan Verma, whose assessment was completed by him, as well. The lower authorities simply relied on the statements of the assessee recorded u/s 132(4). The impugned typewritten paper showed payments of Rs.10.75 crores only. It also shows an entry of Rs.15 crores inserted by pen in this chart. Later, during the assessment proceedings Shri Verma and the assessee filed affidavits retracting the surrender made by them on the basis of this paper. The AO, relying on the statements of the assessee recorded under section 132(4), and ignoring the retraction made by him, added the amount holding it to be remission of liability u/s 41(1), in the hands of the assessee. The assessee filed detailed submissions before the CIT(A) agitating the above addition. The CIT appeals got satisfied with the arguments put forth by the assessee as regards inapplicability of section 41(1) for making addition in the hands of the assessee. During the course of appellate proceedings, served a letter upon the assessee asking him as to why the addition of Rupees 15 crores not be considered as a gift in the hands of the assessee under section 56(2)(vii). The assessee field his reply challenging the power of the CIT appeals with regard to changing the charging section of the addition, by reliance on certain case laws. He further explained as to why addition cannot be made under section 56(2)(vii). The CIT(A) brushed aside all the submission and the case laws and finally confirmed the addition of Rs.15 crore, made by the AO albeit section 56(2)(vii). The Ld.CIT(A) did not distinguish any of the direct case laws which stated that the CIT(A) does not have the power to change the section of the addition made by the AO. Instead, he relied on certain irrelevant case laws which dealt with the powers of CIT(A) but none of them supported the action of changing the section under which the AO had made the addition. He also observed that no prejudice has been caused to the assessee as he had been given an opportunity to place his cards, against the proposed action by the CIT(A). The question of prejudice does not arise in providing an opportunity against doing something ultra-vires the Act. It may be mentioned that the impugned amount stood duly recorded as loan in the audited books of both the parties, viz. Navbharat Nirman Compnay(JV) and Shri Verma, the confirmation of Shri Verma was filed during the course of assessment proceedings in the case of Navbharat Nirman Compnay(JV), the supporting documents, in the form of relevant balance sheets, bank accounts and copy of the relevant ledger accounts were provided to the AO, but brushing aside all the evidence put forth, solely relying on the statements recorded u/s 132(4) which stood retracted, made the addition in the hands of the assessee, and the CIT(A) held it to be justified. For a better understanding of the case, it would be apt to briefly narrate the facts, which are as under – M/s Nav Bharat Nirman Co. (JV), PAN-AABAN6092R (an AOP in which Navbharat Nirman Company and Siwal Builders & Developers are members) was awarded a contract by UIT, Kota for construction of flats under the Affordable Housing Policy, 2009. The AOP had deposited the first installment of the premium payable to UIT, Kota against the award of the above contract. For 57 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT payment of the second installment along with interest, it was in dire need of funds, for which it approached Shri R.K.Verma, who transferred an amount of Rs. 15,00,00,000/- vide cheque No. 418311 dated 15.02.2014 to the AOP, which was deposited by it into it’s current account with PNB, Kota. Out of this loan amount, the premium to UIT was paid. Again, in the FY 2014-15, a sum of Rs. 1,50,00,000/- was advanced by Shri R.K.Verma to M/s Nav Bharat Nirman Co. (JV) through three cheques of Rs.50,00,000/- each for meeting of its financial requirements, on the request of the latter. Hence the total amount of Rs. 16,50,00,000/- was received by M/s Nav Bharat Nirman Co. (JV) and the same has been accordingly shown in it’s books and is reflected in it’s balance sheets filed for the A.Y. 2014-15 & 2015-16 respectively. The above facts stand corroborated by Page-93 seized from Shri R.K.Verma and reproduced by the AO in his assessment order. The return for AY 2014-15 filed by M/s Nav Bharat Nirman Co. (JV) was selected for scrutiny for verification of large unsecured loan taken during the year. This assessment was completed u/s 143(3) by the ITO, Ward-1(1), Kota on 24.06.2016 and the loan was accepted as genuine. However, during the course of search that took place at the premises of the lender (Shri R.K.Verma) on 07.09.2017, the lender, in reply to Q.No.32 with regard to Page-56 of Exhibit 17 of Annexure AS, under some mistaken belief, deposed u/s 132(4) that that the payment of the amounts mentioned therein has been made to Shri Ajay Bakliwal, through cheques, on different dates, which has been shown in his books as Loans & Advances. He made this statement without verifying the entries from his books. He further deposed that the payment was made to settle some dispute with regard to the JV (M/s Vinamra Enterprises & Navbharat Nirman Co.) which was formed for construction of flats under Affordable Housing Scheme at Kansua, Kota, for which an amount of Rs.20 crores was fixed, which has been paid along with interest to Shri Bakliwal, and the said document is a description of part payments made in this regard. It would be pertinent to mention that page No.93 on the basis of which addition of Rs.15 crores was made by the AO, was never confronted either to Shri R.K.Verma or the assessee. No explanation was sought on this document from either of them. Even in the SCN issued to the assessee, no mention of page 93 was made by the AO. However, while making the addition of Rs.15 crore, this document (Page-93) has been relied upon and the document (Page No.56 of Exhibit 17) on which explanation was sought from Shri R.K.Verma and the assessee, has not at all been made the basis. On the basis of the above referred Page No.56 and the statements of Shri R.K.Verma, the assessee was made to depose that an amount of Rs.16.5 crores mentioned in this paper is towards settlement of dispute, in contrast to the evidence stated in the preceding paragraph and was made to surrender the same. It would also be pertinent to mention that the assessee was made to surrender the amount without affording him an opportunity to verify the entries from his bank account/books of accounts. However, later Shri R.K.Verma filed an affidavit to the effect that the impugned amount was given as loan to M/s Nav Bharat Nirman Co. (JV) and not to the assessee and was also not in lieu of settlement of dispute, as deposed by him earlier in his statements recorded u/s 132(4). Page-93 itself 58 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT negates the fact of the assessee receiving the impugned amount, as compensation or otherwise. The assessee, too, filed a detailed affidavit stating the reasons why such a confession was made by him earlier. The Ld.AO rejected the so assumed retraction made by the assessee on account of delay in filing the same, blindly relying on the decision of Hon’ble Rajasthan High Court in the case of Ravi Mathur vs. CIT, quoting certain lines going in favour of the Revenue. He had not taken pains to read and comprehend the entire decision, which also says ...........whenever an assessee pleads that the statements have been obtained forcefully/by coercion/undue influence without material/contrary to the material, then it should be supported by strong evidence, which we have observed hereinbefore.The CIT(A) followed suit. Before the CIT(A), the assessee pleaded that what the AO is holding to be retraction, is not as a matter of fact, a retraction. He stated that the addition in his hands is incorrect and the same, if at all it was warranted, should have been made in the hands of the AOP, of which the assessee is also a member. It is the AOP, which has taken the loan and if at all, any benefit accrued on account of the loan being waived off by the lender [as held by the AO to be remission of liability u/s 41(1) of the Income Tax Act], it accrues to the AOP and not the assessee in his individual capacity. It is also a well established and accepted principal of tax jurisprudence that the right income should be taxed in the right hands, under right head of income in the right year of assessment. Undisputedly, in the present case the transaction of obtaining the unsecured loan was undertaken by the M/s Nav Bharat Nirman Co. (JV). during FY 2013-14 pertaining to AY 2014-15 which were duly recorded in it’s books of accounts and has been continuously shown as liability in the balance sheet till now. Still if the AO, on the basis of statement u/s 132(4), believed otherwise, it ought to have been taxed in the hands of AOP. The head of income under which the AO had made the addition was Remission of liability Section 41(1). A detailed submission as to why the addition could not be made u/s 41(1) was filed before the CIT(A). The CIT(A) was fair enough to concede that the AO could not have made addition u/s 41(1). In view of these findings, he ought to have deleted the addition under these circumstances. But he started another innings for bringing the impugned amount to tax, which is against the spirit of the section 251, which state the powers of the CIT(A). As a matter of fact, he made a reassessment on the same set of facts. 59 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT Page-93 relying on which the AO has based the addition and treated it to be remission of liability is being now relied by Ld.CIT(A) to prove that it was a gift. It may be mentioned that this paper is undated, was never confronted to the assessee either during the search or during the assessment proceedings. It is a document prepared by R.K.Verma and not by assessee. It is not signed or acknowledged by the assessee. No question/clarification in respect of the transactions mentioned therein was sought from the assessee in the SCN issued to him. No opportunity of cross examining the author of the document was provided to the assessee. So, legally it could not be used to draw any adverse inference against the assessee, as held by the Hon’ble Supreme Court in the case of CBI vs. V.C.Shukla & Others [AIR 1998 SUPREME COURT 1406, 1998 AIR SCW 1298] Without prejudice to the above facts, the document clearly states that Shri Ram Kishan Verma has transferred the money to M/s Nav Bharat Nirman Co. (JV) - whose proprietor is Ajay Bakliwal. It also states he will not take the amount back, without mutual consent. It is a well established law that a seized document has to be read as a whole and cannot be broken into parts as per the convenience or sweet will of the Assessing Officer. The Ld.AO has ignored the words transferred the money to M/s Nav Bharat Nirman Co. (JV) and has chosen the words whose proprietor is Ajay Bakliwal to saddle the tax liability on the assessee. Further, he has chosen the words he will not take the amount back and ignored the words without mutual consent to consider it as remission of liability. The clause involves two negatives. It is a rule of interpretation that two negatives in a same clause tend to resolve to an affirmative. So, the proper interpretation of the sentence is that he will take the amount back with mutual consent. As regard reading of a document as a whole, reliance is placed on the following case laws: Glass Lines Equipments Co. Ltd. V/s CIT 253 ITR 454 (Guj.): Interpretation of documents - Documents must be read as a whole. It is a well settled canon of interpretation that a document has to be read as a whole\" it is not permissible to accept a part and ignore the rest of the document. Hissaria Brothers V/s ACIT (Jpr.): 22 Tax World 684 - Held that the seized document has to be read in its entirety and the parties are not allowed to read only that part which is suitable to it. Lal Chand Agarwal V/s ACIT: 21 Tax World 213 - In no case AO can be allowed to consider a part of a particular document as true being favourable revenue and other part of the very document as false since that is favourable to assessee - Duality of the approach of AO is not fair - All the above facts were put up before the CIT(A) who ignored it. The whole addition hinges on evidence gathered from third party document or statement. Now the issue is – Whether a third party statement or entry in absence of any corroborative evidence, despite using ultimate weapon of search, can result in justified addition. The legal provision relating to presumption u/s 132(4A) is 60 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT applicable to the person from whose possession or control the incriminating material is found and seized. Based on the incriminating material found from third party search but not belonging to the appellant, this presumption will not be applicable unless corroborated by other evidence. Presumption available under section 132(4A) can be drawn against the person in whose case search is authorized and from whose possession or control books of account, diary or documents are found in the course of search. Presumptions regarding correctness of contents of books of account etc. cannot be raised against the third party, as has been raised in the present case (Document having been found from R.K.Verma and presumption u/s 132(4A) raised against Ajay Bakliwal) Presumption under section 132(4A) is only against the person in whose possession the search material is found and not against any other person. It is further held that the presumption is rebuttable and not conclusive and it cannot be applied in the absence of corroborative evidence. Straptex India P Ltd. v Dy. CIT [2003] 84 ITO 320 (Mum). In the case of Rama traders vs. First ITO [1998] 25 ITO 599 (Pat.) (TM) it was held that no addition could be made, on the basis of presumption raised by section 132(4A), in the hands of the assessee, where in the books of another firm, certain figures were found showing the purchase made by the assessee. In Asst. CIT v Kishore Lal Balwani Rai [2007] 17 SOT 380 (Chd.), it has been held that though the diary seized enable the revenue to presume that its contents are true, such presumptions is available only against the person to whom it belongs and this is a rebuttable Presumption. Presumption u/s 132(4A) is not available, when the seized papers is recovered from third party and not from the assessee. Sheth Akshay Pushpavadan v Dy. CIT [2010] 130 TTJ 42 (Ahd. UO) As such, the addition sustained by the CIT(A) was arbitrary, illogical and irrational. Reliance by the CIT(A) on the statement of Ajay Bakliwal recorded u/s 132(4) At the outset, it may be mentioned that the statements of the assessee recorded by the Authorized officer u/s 132(4) were retracted by him by filing a detailed affidavit. Cogent and sufficient material was placed on record for retraction. So, no reliance can be placed on such statements for making an addition. It has been held by the Hon’ble Andhra Pradesh High Court in case of Commissioner of Income Tax vs. Naresh Kumar Agarwal that if the disclosure made by the assessee u/s 132(4) has been retracted by him, any addition made by placing reliance on the same is unjustified and illegal. In yet another important decision in Commissioner of Income Tax vs. Sunil Aggarwal Delhi High Court, observed that where the assessee did not simply retract the statement made by him during the course of surrender, but also offered an explanation on the issue of surrender with reference to the entries in the books of accounts, the addition made by the AO was not justified. In the case of CIT Vs Shri Ram Das Motors Transport 61 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT (1999) 238 ITR 177 (A.P.), the Court held that a mere confessional statement without there being any documentary proof shall not be used in evidence against the person who made such statement. The assessee would finally like to place reliance on the decision of Jurisdictional Jaipur ITAT in the case of ACIT vs. Devendra Kumar Choudhary (ITA No.828/JP/16), where in exactly identical circumstances, the Tribunal dismissed the appeal filed by the Revenue and confirmed the order of CIT(A) of deleting the addition, after duly taking into consideration the decision of Hon’ble Jurisdictional High Court in the case of Ravi Mathur. Crux of the case – (1) That Sh. R. K. Verma had advance loan/transfer Rs.15 crore to M/s Nav Bharat Nirman Co. (JV) relevant to the A.Y. 2014-15, as is evident from the solitary seized document (Exhibit 93) in this regard, claimed to be found and seized from the residence of Shri R.K.Verma, referred to by the AO in his assessment order. (2) That Sh. R. K. Verma has also confirmed this fact by way of filing an affidavit stating that this loan pertains to M/s Nav Bharat Nirman Co. (JV). (3) That the loan confirmation in this regard for the year duly signed by Shri R. K.Verma is on record, which was also produced during the course of scrutiny assessment proceedings in the case of M/s Nav Bharat Nirman Company (JV) for AY 2014-15. (4) That the duly audited balance sheet of M/s Nav Bharat Nirman Company (JV) for the year is on record, which was also produced during the course of scrutiny assessment proceedings in the case of M/s Nav Bharat Nirman Company (JV) for AY 2014-15. (5) That the regular assessment of M/s Nav Bharat Nirman Co. (JV) has been completed u/s 143(3) by the erstwhile ITO, Ward-1(1), Kota now ITO, Ward-2(1), Kota examining this issue which was one of the reasons for taking up the case for scrutiny, and the unsecured loan has been accepted as genuine and no adverse inference in this regard has been drawn. The relevant query letter and the reply thereto are being filed as an evidence in support thereof. (6) That M/s Nav Bharat Nirman Co. (JV) has used the loan amount for its business purpose to deposit the premium payable to UIT, Kota, as is evident from its bank statement. (7) That the statement of the assessee u/s 132(4) made the sole basis by the AO for making the addition has been retracted by the assessee and hence reliance on the same for making the addition is misplaced. (8) That in lieu of premium amount, UIT, Kota will provide to M/s Nav Bharat Nirman Co. (JV) the following plots on the completion of the project :- (i) Plot No. B-2 at Jhalawar Road, Opp. City Mall, Kota. (ii) Plot No. 12 & 13 at Rajeev Gandhi Extension on which M/s Nav Bharat Nirman Co. (JV) has started Multi-Storeyed Flats. (iii) Plot No. 1, Karneshwar Scheme. 62 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT It may be mentioned that Plot No. 12 & 13 at Rajeev Gandhi Extension have already been provided to M/s Nav Bharat Nirman Co. (JV) Plot No. B-2 at Jhalawar Road and Plot No.1 at Karneshwar Scheme will be provided to M/s Nav Bharat Nirman Co. (JV) after completion of the project of the Affordable Housing Scheme, 2009. The project work of Affordable Housing Scheme is still in progress and has to be completed up to 31.03.2025 as per the revised UIT terms. (9) That as stated above, the project is still under construction and no revenue so far, has been generated out of it, and as such, the repayment of loans obtained from Shri R.K.Verma, has not been made. (10) It would be pertinent to mention that Mr. Anurag Bansal resident of A-30, Talwandi, Kota was admitted as a new partner for the reason that M/s Nav Bharat Nirman Co. (JV) was in further need of funds. To fulfil the needs of working capital, private loan has been taken from IVM India Finance Pvt. Ltd. This new loan was obtained by M/s Nav Bharat Nirman Co. (JV) to complete the remaining work of Affordable EWS and LIG on UIT land at Block B-1, M-1, M-2, M-3, R-1 in Bhadana, Mohanlal Sukhadiya & Ranpur Scheme of UIT, Kota under Model No.4 of Affordable Housing Scheme Policy, 2009. All the above evidences establish beyond doubt that M/s Nav Bharat Nirman Co. (JV) has taken loan from R. K. Verma for the purpose of its business and the transactions are duly reflected in its regular books of accounts, which have been duly audited. The ITRs have been filed and the same have been accepted by the department. Sh. R. K. Verma has confirmed the loans. In view of these facts, the Provisions of Section 56(2)(vii) for upholding the addition, if at all are to be invoked, it has to be done in the case of M/s Nav Bharat Nirman Co. (JV) and not in the case of the assessee. So, the additions of Rs. 15 crore for A.Y. 2014-15 being bad in law and on facts, deserve to be deleted. In the appellate proceedings, the CIT(A) being satisfied with the assessee’s submission that addition u/s 41(1) could not have been made by the AO in the circumstances of the case, observed that as the assessee has received an amount of Rs.15 crores in AY 2014-15, without any consideration, sustained the addition as Income from other sources as per the provisions of section 56(2)(vii) of the Income Tax Act. The assessee had pleaded before the CIT(A) that the Act does not permit such an action to be taken by the CIT(A), but the CIT(A) The powers of the Commissioner (Appeals) are mentioned in Section 251. Sub-section-(1) states - In disposing of an appeal, the Commissioner (Appeals) shall have the following powers- (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment. The power to change the section under which an addition has been made, has not been conferred by the statute. This issue is outside the scope of the power conferred on the CIT(A). For this proposition, the assessee relies on a recent judgement of ITAT, Chennai in the case of Sekar Jayalakshmi vs. ITO, in I.T.A. No.20/Chny/2021. The Hon’ble Bench has held as under – 63 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT I am of the considered view that law does not permit for such change of provision of law. As per section 250 of the Act, the ld. CIT(A) is empowered to make further inquiry as he thinks fit or may direct the Assessing Officer to make further inquiry and report to the ld. CIT(A). As per section 251(1)(a) of the Act, in appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment, but there is no such power provided by the law that ld. CIT(A) could change the provision of law qua the item of which assessment was made. Therefore, in the absence of such power, learned CIT(Appeals) could not have treated the addition made under section 69A of the Act. Therefore, the addition made by the ld. CIT(A) under section 69A of the Act is liable to be deleted. The assessee would further like to place reliance on the decision of ITAT, Delhi in the case of Toffee Agricultural Farms Pvt. Ltd. vs. ITO in ITA No.4903/Del/2021 wherein an identical judgement has been rendered observing – I am of the considered view that law does not permit for such change of provision of law. As per Section 250 of the Act, the learned CIT(Appeals) is empowered to make further inquiry as he thinks fit or may direct the Assessing Officer to make further inquiry and report to the learned CIT(Appeals). As per Section 251(1)(a), in appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment, but there is no such power provided by the law that learned CIT(Appeals) could change the provision of law qua the item of which assessment was made. Therefore, in the absence of such power, learned CIT(Appeals) could not have treated the addition made u/s 69C as the addition made u/s 69B and the same is contrary to the spirit of the Act. Without prejudice to the above, the submission is as stated infra - For the amount of Rs.15 crore stated to be received by the assessee, we present our case. At the very outset it is submitted that the assessee has not received the amount of Rs.15 crore, as alleged. Detailed submission made supra dispels the cloud that the assessee is not the recipient of the impugned amount. It is the AOP M/s Nav Bharat Nirman Co. (JV), which has received the amount, as is evident from the duly signed confirmation of loan by Shri R.K.Verma and the bank account of the AOP. The receipt of an amount by an assessee is evidenced through cash book or bank statement. From the cash book and bank account of the assessee, it is evident that he has not received any amount during the year, as alleged. All these evidences show that the receipt of the impugned amount was in the hands of AOP and not the assessee. Section 56(2)(vii) is applicable only when an individual or HUF receives any sum of money, without consideration. The paper which has been relied upon by the CIT(A) for confirming the addition clearly states that the amount has been transferred to Navbharat Nirnan Company(JV) So, when there is no receipt of any amount in the hands of the assesse, how can he be saddled with tax liability on account of receipt of gift. Before we dwell upon to present our submission as to why the amount should not be taxed u/s 56(2)(vii), it would be pertinent to trace back the history of introduction of the above section in the Income Tax Act. 64 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT (i) The Government, with an objective to impose taxes on gifts, introduced the Gift Tax Act, 1958 w.e.f. 01-04-1958. Under this Act, tax was leviable on the donor of gift under certain specific circumstances. However, by the Finance (No. 2) Act, 1998, the Act was made inapplicable to gifts made on or after 1.10.1998. (ii) The period from October 1998 till March 2004 was without any tax on gifts. However, the gift tax was reintroduced in a new form and the provisions in respect there to, were included in the Income tax law vide Finance (No. 2) Act, 2004, w.e.f. 1.4.2005. The remarkable difference being that under the erstwhile law, gifts were taxed in the hands of the donor while under the current law, the same became taxable in the hands of donee / recipient of gift. (iii) The Explanatory Memorandum to Finance (No. 2) Bill, 2004 did not clearly spell out the intention behind introduction of the provision. However, the same is clear from the budget speech delivered by the Hon. Finance Minister, as under: \"Hon’ble Members are aware that I abolished the gift tax in 1997. That decision remains, but a loophole requires to be plugged to prevent money laundering. Accordingly, purported gifts from unrelated persons, above the threshold limit of Rs.25,000 will now be taxed as income. Gifts received from blood relations, lineal ascendants and lineal descendants, and gifts received on certain occasion like marriage will continue to be totally exempt..........\" The intention was thus to prevent money laundering. (iv) To give effect to the above, the Finance (No. 2) Act, 2004 had carried out the following amendments: a) The definition of income in section 2(24) of the Income-tax Act, 1961 was enlarged by inserting a new sub-clause (xiii) so as to include sums referred to in section 56(2)(v) of the Act; b) Clause (v) was inserted in Section 56(2) taxing any sum of money exceeding Rs. 25,000, received without consideration, by an individual or a Hindu Undivided Family, with certain exceptions. (v) In Chandrakant H. Shah v. ITO[2009] 28 SOT 315 (Mum.), the objects of section 56(2)(v) was explained by ITAT as under: “11.4....From the perusal of the Hon'ble Finance Minister's speech,… it is apparent that this provision has been brought on statute to fill up the vacuum created by abolition of the Gift tax Act, 1958, in 1997…. there was a practice of bogus foreign gifts, which started with the Government offering immunity for such gifts as part of Disclosure Schemes, however, the said practice of bogus gifts continued even after the Amnesty Scheme expired. It is also true that in the present materialistic society only relatives are likely to make real gifts out of natural love and affection though in the exceptional cases friends and distinct [sic: distant] relatives can also make gifts. It is also true that money laundering, generally, may take place more by way of gifts than by any other means like loans because the person adopting such means, may legally be forced to actually repay the same, if the lender proceeds to do so no person would like to adopt such risky medium unless both entities are very closely related and controlled by same group. The Finance Minister has also emphasized on the fact of a loophole existing due to abolition of the Gift-tax Act, 1958, and, thereafter, words 'money laundering’ have been used in his speech, hence, the intention is only to prevent money laundering by way of bogus gifts. The Hon'ble Finance Minister has made this intention clear by referring to the Gift 65 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT tax Act, 1958, and by adding exception for gift received from relatives on the occasion of marriage etc. It is also noteworthy that like gift tax, the basic exemption limit has also been prescribed in the section and various exceptions provided in section 56(2)(v) of the Act which were also existing in the like fashion in the erstwhile Gift-tax Act, 1958, and this fact also leads to a conclusion that only bogus gifts are also brought to tax under this provision.... Thus, in view of above discussion, we are of the view that this provision applies to the transactions where undisclosed/unaccounted Income of a person is brought in his hand by way of purported gifts.” (vi) Through the Taxation Laws (Amendment) Act, 2006, a new clause (vi) was inserted in subsection (2) of section 56, whereby whole of the aggregate value of any sum of money exceeding Rs. 50,000 received without consideration by an individual or HUF on or after 1-4-2006 was made chargeable to income-tax under the head 'Income from other sources' subject to the exceptions provided in the said clause. Simultaneously, clause (v) was made inoperative w.r.e.f. 1.4.2006. Thus, the threshold limit was increased from Rs. 25,000 to Rs. 50,000. Earlier, clause (v) was so worded that only if the sum received was greater than Rs. 25,000, it was taxable. However, provisions of clause (vi) were clear in that respect that the entire amount received was chargeable to tax, if the aggregate of such amounts was greater than Rs. 50,000. It is to be noted here that in order to prevent money laundering, the law makers took only a small step, to tax purported gifts received in cash (i.e. monetary gifts). Gifts in kind were outside the purview of Section 56(2)(v) as well as clause (vi). (vii) The Finance (No. 2) Act, 2009 extended the scope of taxability to cover certain gifts in kind. Clause (vi) was made inoperative in respect of gifts received w.e.f. 1.10.2009 and new clause (vii) was introduced w.e.f. 1.10.2009. The Explanatory Memorandum stated that anything which is received in kind having ‘money’s worth’ i.e. property is also outside the purview of the existing provisions. So, new clause (vii) was inserted which taxed, in addition to monetary gifts, certain properties (as defined) received by way of gift. A striking aspect of this amendment made by Finance (No. 2) Act, 2009 was that as properties received without consideration were brought to tax, properties received (purchased) for inadequate consideration were also brought in the tax net. So to say, the agreement value of properties was benchmarked to market value for movable properties and stamp duty value for immovable properties. Accordingly, the new provision substantially widened the scope of taxation of gifts. However, vide Finance Act, 2010, the provision was again amended w.r.e.f. 1-10-2009 to remove the taxability of immovable properties received for inadequate consideration. This provision of taxing immovable properties received (purchased) for inadequate consideration was reintroduced by Finance Act, 2013 with certain safeguards. The underlying assumption behind section 56(2)(vii) seems to be that the actual consideration for a property cannot be less than its circle rate/ stamp duty value and in case the apparent consideration paid is less than the stamp duty value, the difference amount appears to have been paid in cash outside the books of accounts by the transferee. Such amount is thus deemed to be income of the Individual or HUF assessee as provided under this section viz. section 56(2)(vii). However, this 66 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT clause was of limited applicability as the provision of section 56(2)(vii) were applicable only to individual and HUF. Again, in the Explanatory Memorandum to Finance Bill, 2010, the objects behind done- based transactions have been explained as under: \"The provisions of section 56(2)(vii) were introduced as a counter evasion mechanism to prevent laundering of unaccounted income under the garb of gifts, particularly after abolition of the Gift-Tax Act.” The provision of Section 56(2)(vii) was introduced in the Income Tax Act to curb the practice of individuals and entities receiving gifts in order to avoid tax liabilities. From the above discussion, it is clear that the said section deals with gifts (be it of money, movable property or immovable property). Now, the question arises as to what is a gift? A gift has not been defined in the Income Tax Act. According to Merriam Webster Dictionary, a gift means - something voluntarily transferred by one person to another without compensation As per Dictionary.com, it means - something given voluntarily without payment in return, as to show favor towards someone, honor an occasion, or make a gesture of assistance; As per Section 2(xii) of The Gift-Tax Act, 1958 \"gift\" means the transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or money's worth, and includes the transfer or conversion of any property referred to in section 4, deemed to be a gift under that section; In all the above references, one factor in respect of gift is common, and that is - it is made voluntarily. Now, for the word Voluntary we may refer to its dictionary meaning. According to Merriam Webster Dictionary: it means acting or something done of one's own free will without valuable consideration or legal obligation. According to Collins Dictionary Voluntary actions or activities are done because someone chooses to do them and not because they have been forced to do them. Now, it is to be seen whether the impugned amount was a gift. For this, we have to analyse the statements of the lender Shri R.K.Verma recorded u/s 132(4) Shri Verma was questioned on the contents of Page-56 of Exhibit 17 of Annexure-AS. All the amounts stated to be paid by Shri Verma have a date of payment against them and after each payment made, the amount outstanding thereafter is mentioned. No such date is mentioned against this amount of Rs.15 crore, which seems to have been inserted after this document had reached finality. Therefore, no cognizance to the reply of Shri Verma to Q.No.33 in respect of this amount can be given. Further, no attempt was made either by the AO or by the CIT(A) to find out whether this entry (Rs.15 crore) stated in this paper stands reflected on the relevant date in the books of Shri Verma or the assessee. It is being reflected in Page-93, but then here, Shri Verma has stated that the impugned amount has 67 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT been transferred to M/s NavBharat Nirman Co.(JV) and it will be taken back (Issue already discussed supra). Moreover, this page was never confronted either to the assessee or Shri Verma, during the course of search or assessment. So, the addition sustained by CIT(A) u/s 56(2)(vii) does not get supported either by Shri Verma’s statements or by evidence found during search. Even if your honour wishes to place reliance on Shri Verma’s statements, Shri Verma never said that he has gifted this money to the assessee. He said that the amount has been paid to resolve the dispute, and thus, it is clear that the payment has not been made voluntarily but under compulsion, so it is not a gift as contemplated u/s 56(2)(vii). Here, Shri Verma, was forced to pay the amount as a consideration for amicable settlement of the dispute. He did not want to be involved in legal warfare, and he chose to settle the dispute out of court and offered certain amount. Had there been no dispute, he would not have given the impugned amount. So, it is under compulsion that the money was paid. It can not be considered as an amount given without any consideration. A gift on the other hand is out of natural love and affection, it is voluntary and there is no compulsion or legal obligation to pay. Therefore, the amount received by the assessee, could not have been regarded as a gift and hence could not have been taxed u/s 56(2)(vii). Further, while making the addition, the AO held that the assessee has received the alleged amount towards settlement of a dispute that arose between the assessee and Shri R.K.Verma. This assertion by the AO makes it clear that the amount is not a gift as contemplated in section 56(2)(vii). It is a price paid for settling a dispute by Shri R.K.Verma. So, there exists a quid-pro-quo in this transaction. In a legal context, it refers to a situation where one party provides something of value to another party in exchange for something in return. The amount has not been received without consideration. Consideration is something of value exchanged between the parties to a contract. It can be money, work performance, property, or any other things. Both parties to a contract must receive consideration for a contract to be valid. For the meaning of consideration, we have to rely on its definition given in the Indian Contract Act, 1872, According to Section 2(d) of this Act consideration is defined as follows: “When at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or abstain from doing something, such act or abstinence is called a consideration for the promisee.” Here in this case, as per the statements of Shri R.K.Verma, recorded u/s 132(4), relied by the AO in spite of retraction by him later, at the desire of Shri R.K.Verma, the assessee was made to settle the dispute and this was the consideration against the impugned amount. So, the amount has not been received for nothing or gratuitously or as a gift, but has been received as consideration on account of settlement of a business dispute. Another important feature of gift is that it is given by the Donor out of his capital. The capital of the donor gets reduced by the 68 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT corresponding amount of gift. The books of Shri R.K.Verma show that there is no debit to his capital account of the impugned amount. Rather, his balance sheet shows the impugned amount as Loan to JV. In view of the above facts, the receipt can not be considered as a gift and there can be no applicability of the provisions of section 56(2)(vii), particularly in the hands of the assessee, when it has been shown that the assessee never received the impugned amount but it was the AOP which received it. The case of the assessee is squarely covered by the decision of ITAT Mumbai, in the case of Chandrakant H. Shah vs. ITO, [2010] 3 ITR(T) 398 (Mumbai) the head note of which is as under - Whether since amount in question had been shown in balance sheet submitted along with return of income as loan only and lenders had also confirmed same, apparently, it was a case of a loan transaction and not a case of gift, as held by Assessing Officer - Held, yes - Whether, even otherwise, since revenue authorities had not brought any material on record to support their finding that assessee was not under an obligation to repay loan, it could be concluded that impugned order was passed by them on mere presumptions and assumptions, particularly when there existed no provision in section 56(2)(v) to treat loan, which might not be repaid, as income of assessee - Held, yes - Whether, therefore, impugned addition made to assessee's income was to be deleted - Held, yes Ground No.6 The Ld. CIT (A) erred in confirming the addition of Rs.2,65,99,000/- made by the AO in the hands of the appellant on the basis of Page 6 & 7 of Exhibit-8, notwithstanding the fact that these papers belonged to the company M/s Millenium Buildhome Pvt. Ltd., and this fact was stated by at the time of search, in his statements recorded u/s 132(4). As regards the addition of Rs.2,65,99,000/- which has been made on the basis of Exhibit-8 of Annexure AS, which contained 9 pages, it may be mentioned that the assessee in his statements recorded u/s 132(4) in reply to Q.No.19 at page-21 had clearly stated that the pages pertain to transaction of purchase of land between his company M/s Millenium Buildhome Pvt. Ltd. and M/s Newaji Estate Pvt. Ltd. He further deposed that Pages 7 to 9 is the estimate of the cost of this land and construction made there upon, which he (the assessee) would explain later. It may be mentioned that in reply to SCN dated 14.12.2019 issued to the assessee, proposing additions on this issue, the assessee in very explicit terms submitted that the papers pertain to Millenium Buildhome Pvt. Ltd. and detailed explanation on the issue has been filed in reply to notice issued in the case of the Company. It would be worth mentioning that in the SCN dated 15.12.2019 issued to M/s Millenium Buildhome Pvt. Ltd., the AO asked clarification in this regard. The assessee company vide it’s reply dated 20.12.2019, filed detailed submission in this regard. Necessary evidence to substantiate its stand was also produced. The Ld.AO being satisfied with the reply filed by the assessee company, did not make any addition on this issue while completing the assessment of M/s Millenium 69 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT Buildhome Pvt. Ltd. for AY 2014-15. However, while passing the assessment order in the case of the assessee, he held it as unaccounted cash payment made by the assessee to M/s Newaji Estate Pvt. Ltd, towards purchase of plot No.B-1, Parvatipuram, Kota. Evidence in the form of Sale Agreement is being again provided, which clearly states that the said plot has been sold by M/s Newaji Estate Pvt. Ltd, to M/s Millenium Buildhome Pvt. Ltd. for a total consideration of Rs.2,13,90,000/- . This agrrement was very much a part of the seized exhibit. The Allotment letter, Patta and other documents issued by UIT, Kota in the name of M/s Millenium Buildhome Pvt. Ltd., which evidence that the plot of land belongs to it and not the assessee were also adduced as evidence, once again. It would be pertinent to mention that the assessment of M/s Millenium Buildhome Pvt. Ltd. for the relevant year was also completed by the AO u/s 143(3) r.w.s.153C. The Ld.AO finalised the assessment by adding the amount of on money received on booking/sale of flats built on this plot by Millenium Buildhome Pvt. Ltd., but in his wisdom, ignoring the submission and the glaring evidence, instead of adding the impugned cash payments made in acquiring the plot in the hands of M/s Millenium Buildhome Pvt. Ltd., if at all it was warranted, made the addition in the hands of the assessee. It would be pertinent to mention that the sale agreement between M/s Newaji Estate Pvt. Ltd. and Millenium Buildhome Pvt. Ltd. was executed by Smt. Usha Jain on behalf of Millenium Buildhome Pvt. Ltd. So, when there is no mention even of the name of the assessee, in any of the documents, there was absolutely no basis to tax the so called unaccounted payment in the hands of the assessee. In view of the binding decision of Hon’ble Supreme court in the case of ITO vs. Ch. Atchaiah, to the effect that the income should be assessed in the hands of the right person, the addition in the hands of the assessee may kindly be deleted. The Ld.CIT(A) confirmed the addition made by the AO by observing that the document was seized from the assessee’s premises and is related to agreement with Newaji Estate Pvt. Ltd. It is clear that an amount of Rs.2,65,99,000/- has been paid in cash from undisclosed sources. It is inferred that the same must have been paid from the unaccounted income of Ajay Bakliwal………When the impugned land was purchased and owned by Millenium Buildhome Pvt. Ltd. which is evident from the sale deed, which was part of the seized record and is being reflected in its books by the Company and further when the on-money received on sale of such flats constructed on the impugned land, was brought to tax in the hands of Millenium Buildhome Pvt. Ltd., what prompted the CIT(A) to hold that the unaccounted cash utilized in purchase of the land belonged to the assessee. Simply on the basis of surmises and conjectures, and adopting a pick and choose approach, the AO erred in making the impugned addition and the CIT(A) further erred in upholding the same. In view of the submissions made, both the additions confirmed by the CIT(A) deserve to be deleted.” 70 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT 6. To support the contention so raised in the written submission reliance was placed on the following evidence / records / decisions: S.No. Particulars Page No. 1. Copy of panchnama of search 1-5 2. Copy of statement of assessee recorded u/s 132(4) 6-10 3. Copy of confirmation of loan of Rs.15 crore 11-12 4. Copy of Balance sheets of Navbharat Nirman Co(1V) 13-14 5. Copy of Balance sheet of Aay Bakliwal 15 6. Copy of ladger A/c of Navbharat Nirman Co. in the books of Vinamra Enterprises 16 7. Copy of Form-26AS of Ajay Bakliwal 17 8. Copy of reply filed to SCN by Ajay Bakliwal in respect of amount of Rs.2,65,99,000/- 18-22 9. Copy of reply filed to SCN by Millenium in respect of amount of Rs.2,65,99,000/- 23-27 10. Copy of assessment order with notice u/s 142(1) and reply filed thereto 28-34 11. Copy of Retraction letter along with affidavit filed by assessee 35-39 7. The ld. AR of the assessee vehemently argued that the document which the revenue relies is in relation to the transaction already reflected in the books of account. Thus, considering the decision of the apex court in the case of Abhishar Buildwell, the transaction recorded in the books cannot be termed as incriminating material and therefore, no addition is required to be made. The paper which revenue relies in the 153A proceeding was not found from the premises of the assessee and if the revenue relied on that document the proceeding in this case is required to be conducted after considering the provision of section 153C of the Act and not 153A of the Act. The transaction is duly recorded and is business 71 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT transaction. The revenue has based on the statement of Shri R. K. Varma obtained the disclosure u/s. 132(4) which has been retracted not only by the assessee but even by Shri R. K. Varma. Not only that Shri R. K. Varma filed an affidavit stating the fact that Rs. 15 Cr as alleged to have been disclosed was wrong. The relevant part of the affidavit reads as under: 72 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT 73 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT The statement which the revenue relies were retracted by both the parties and in response to a letter issued u/s. 133(6) during the pendency of this appeal Shri R. K. Varma has confirmed to have paid Rs. 15 Cr to the assessee and is shown as receivable in his books of accounts. The reply so submitted reads as under : 74 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT While search proceeding the statement of Shri R. K. Varma recorded which he has retracted stating that the same was given under pressure and stress and he has retracted that statement. After the retraction ld. AO did not issue any notice to anyone i.e. to the assessee or to Shri R. K. Varma to verify the correctness or otherwise of the retraction statement and has not tried to verify as to how and why the transaction recorded in the books and confirmed by both the parties can be considered as income of the 75 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT assessee. The page as referred as page 93 scanned in the order at page 4 was not confronted with the assessee, no question was raised in the search as well as in the assessment proceeding and there is no evidence as such of having knowledge of that page relied upon by the revenue. Even otherwise the last line of that page says that “No interest will be charged on this amount and I will not take it back without mutual consent between us.” Thus, it is clear that the loan was continue without interest with mutual consent and there is no settlement to write of those loan in favour of the assessee. Not only that unilateral singed paper which Shri R. K. Varma himself retracted by filling an affidavit and filed a confirmation [ during the pendency of appeal in reply to letter u/s. 133(6) on 24.01.2025 before the ld. AO he confirmed loan transaction] cannot be considered as income of the assessee. All the alleged transaction which was considered as income in the assessment is duly reflected as loan transaction in the books of both the parties and therefore, the same cannot be considered as income or that of the gift in the hands of the assessee as alleged by ld. CIT(A). The alleged loan is duly reflected in the books of account of the JV and the same has already been accepted in the scrutiny assessment of the JV M/s. Nav Bharat Nirman Company (JV) [ AABAN6092R] vide order dated 24.06.2016. In that assessment the reasons for taking up the case 76 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT under scrutiny was to verify the loan under CASS. The extract of that notice issued for JV to verify the loan transaction is reproduced [ page 32 of the paper book ] herein below : The reply to this notice was made [ page 34 of the paper book] and same reads as under : B) Large Increase in Unsecured Loan: As narrated in para A above, during the year under consideration the assessee has to deposit premium amount to Awarder UIT, Kota under terms of Agreement. As far as the Unsecured Loan raised during the year under consideration, the assessee accepted only on loan of Rs. 15,00,00,000/- from Ram Kishan Verma. The copy of account of Loan from Ram Kishan Verma is attached for your kind perusal. Thus, the issue which is raised by the ld. AO is already in the books of the JV and not in the books of the assessee and when the same is not in the books of the assessee how can an addition of income of loan in the JV which is duly confirmed and still outstanding can be considered as income 77 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT of the assessee. There is nothing incriminating in the JV dissolution deed and since that transaction is already recorded in the books of account no addition can be made dehors any incriminating material and the issue raised is already accepted in the assessment proceeding of the JV. As regards the other addition of Rs. 2,65,99,000/- the assessee vide recording the statement submitted that transaction recorded were between M/s. Millenium Build Home P. Ltd and M/s Nevralji Estate P. Ltd., and is related to the transaction between those two companies. While conducting the assessee ld. AO has already considered that issue in the case of M/s. Millenium Build Home P. Ltd. The reply filed by that company is placed on record in the paper book so filed. Any addition is any is to be made the same should be made in the hands of that company and not in the hands of the assessee. In the case of Millenium Build Home P. Ltd., notice u/s. 153C of the Act were already issued. Merely the assessee is a director in that company no addition can be made in the hands of the assessee. Even the flat is to be given by the company as per the noting recorded and not by the assessee. As regards the loan transaction to be considered as incriminating or not ld. CIT(A) has erred in holding that the since documents seized shows the amount paid related to dissolution dispute settlement payment made by 78 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT Shri R. K. Varma to the assessee. In fact that amount is outstanding in the books of the JV and in the hands of the assessee. Even the statement relied and made by both the parties were retracted and therefore, that finding of the ld. CIT(A) is without appreciating the correct facts already on record. As regards the merits of the addition ld. AR of the assessee submitted that ld. AO made the addition u/s. 41(1) of the Act which ld. CIT(A) hold that the arguments with regard to non-applicability of section 41(1) are not found to be relevant as he made the addition u/s. 56(2)(vii) of the Act and for making that addition he has issued a show cause notice. Ld. AR of the assessee submitted that unilateral transaction cannot be considered as transaction u/s. 56(2)(vii) of the Act. Not only that the amount is not recorded in the books of the assessee it is in the books of the JV. As regards the change of section by ld. CIT(A) ld. AR of the assessee relied upon the various judgement as cited in the written submission. 8. The ld. DR is heard who relied on the findings of the lower authorities and more particularly advanced the similar contentions as stated in the order of the ld. CIT(A). He vehemently argued that the addition of 56(2)(vii) was made based on the incriminating material in the form of Dissolution Deed found and letter of Shri R. K. Varma and therefore, the case of the 79 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT assessee is not covered from the decision of the apex court in the case of Abhisar Buildwell P. Ltd. He also submitted that based on documents so found issue of notice u/s. 153A of the Act in the case of the assessee cannot be reads without authority and therefore, the contention of the assessee cannot be believed. The search was same the document found related to both the parties and therefore, the assessee cannot be say and submit that the notice be given in 153C of the Act. Shri R. K. Varma and the assessee both agreed on the disclosure and after that they have retracted and that retraction is not supported by any other evidence. Relying on the decision referred in the order of the ld. CIT(A) delivered by the Hon’ble Kerala High Court wherein the High Court held that if any statement is given it has evidentiary value and the same is based on the evidence found in search. As there is no definition of the incriminating material given in the law the statement along with the evidence is incriminating material and therefore, the addition is required to be sustained. Dissolution Deed was found in possession of the assessee and the same was filed by the ld. DR on 04.02.2025. He also filed relevant extract from the statement of the assessee and that of Shri R. K. Varma. Based on that document ld. AO was well within his power to issue notice u/s. 153A of the Act to the assessee. 80 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT As regards the addition in respect of the transaction between M/s. Millenium Build Home P. Ltd and M/s Nevralji Estate P. Ltd., the document was found to be in possession of the assessee’s premises. He being the director of the company liable to explain the transaction recorded therein. The transaction were written for both the cheque and cash. The assessee is suppose to explain the source of the cash transaction reflected in that account. When the transaction is found to be have been made in the cash it is the assessee has to explain not the company. As regards the cessation of liability ld. AO made based on the dissolution deed and therefore, he has made the addition in appreciation of the seized material found and seized. In para 3 of that dissolution deed it is written that nothing is payable means the transaction of loan is also not payable and thereby it is was rightly made. As regards the cash payment of Rs. 2,65,99,000/- since the cash is paid and the document found in the possession of the assessee it is the obligation of the assessee to establish that he has not paid the cash. 9. Upon the various arguments raised by the ld. DR, ld. AR appearing on behalf of the assessee has filed his rejoinder to the contention of the revenue which reads as under; 81 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT “On the legal issue, the Ld.DR has stated that the proceedings were rightly initiated u/s 153A. The DR seems to be on a wrong footing. The appellant never disputed the initiation of proceedings by issue of notice issued u/s153A. In any case, as a search took place at the premises of the assessee, notice u/s 153A had to be invariably issued by the AO for six assessment years and for the relevant assessment year. What is being agitated by the appellant is that addition could not have been validly made u/s 153A in pursuance of material seized from another assessee, Shri R.K.Verma. As both these years were unabated years, any addition could have been made only on the basis of material found and seized from the assessee. Reference in this regard may be made to the decision of Hon’ble Supreme Court in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd. in which it has observed as under- 13. For the reasons stated hereinabove, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra) and the decisions of the other High Courts taking the view that no addition can be made in respect of the completed assessments in absence of any incriminating material. 14. In view of the above and for the reasons stated above, it is concluded as under: i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ii) all pending assessments/reassessments shall stand abated; iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the ‘total income’ taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The Ld. DR relied on the decision of Kerala High Court in CIT vs. St. Francis Clay Décor Tiles, for the proposition that the statement of a person recorded u/s 132(4) 82 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT constitutes an incriminating material. The case stands already distinguished in the written submission filed earlier and is therefore, not being reiterated. The Ld. DR has filed a paper book containing 7 pages to show that these constitute incriminating material. Page 1-2 is the affidavit of Shri R.K.Verma retracting his earlier statement, how come it constitutes an incriminating material is incomprehensible. Then, he has made a reference to the Dissolution deed (Page 3) There is no denying the fact that this document was found and seized from the premises of the assessee. It has to be noted that during search, business documents executed in the ordinary course may be found naturally, but it does not mean that such documents are incriminating in nature. Therefore we need to understand the difference between a seized document and an incriminating document. An incriminating document may be the part of a seized document if it stays unexplained, undisclosed, unaltered or unsubstantiated. The DR referred to Clause 3.3 to Clause 3.5 of the deed (which was later provided) to prove his point. It is not understood as how come these clauses make the deed an incriminating document. Page 4-5 and 6-7 are extracts of the statements of the assessee and Shri R.K.Verma, respectively, which the Ld.DR believes to constitute incriminating material. First of all, these statements can’t be said to be some material unearthed during search. As per Cambridge dictionary, the word UNEARTH means to find something, especially information, often after careful searching. As per Britannica Dictionary definition of UNEARTH is to find or discover (something) that was hidden or lost. Material unearthed during search means something which pre- existed (at the premises of the searched person) and was detected. Statements recorded u/s 132(4) is material which did not pre-exist but has been generated during search. Secondly, as these statements stood retracted, they lose their relevance. The Ld. DR further referred to copy of ledger A/c of Shri R.K.Verma in the books of the assessee to establish it as an incriminating document and stated that this paper was found and seized from the premises of the assessee and the same reconciles with certain entries listed on Page-56. Your Honors, when this ledger account forms part of the books of the assessee, how can it be labeled as incriminating, is not understood. As for addition of Rs.2,65,99,000/- made by the AO in the hands of the assessee, on the basis of Page-6 & 7 of Exh.- 8 of Ann.AS, the assessee during his statements recorded u/s 132(4) had clearly stated that Exh.- 8 of Ann.AS, relates to his company Millenium Buildhome Pvt. Ltd. The relevant page of the statement is enclosed for your honor’s perusal. In reply to the SCN dated 14.12.2019, he again reiterated the same facts. It would be pertinent to mention that addition(s) on 83 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT the basis of all other exhibits (3,4,6,18,20,27,28 & 29) stated by the assessee to be relating to Millenium Buildhome Pvt. Ltd. were considered in the hands of the Company Millenium Buildhome Pvt. Ltd. Only in case of Exh.8 (page-6 & 7) addition was made in the hands of the assessee. It was an argument of the Ld. DR that the on-money in cash must have been paid by the assessee as the Company is not a natural person. Going by his logic, the addition on account of on-money received on booking of flats in Millenium Apartments should also have been made in the hands of the assessee as well, and not in the hands of the Company, as has been done by the AO. The DR’s argument that when the assessee was questioned on these papers in his capacity as director of Millenium Buildhome Pvt. Ltd., he said that this is a dumb document. The assessee gave his reply/explanation with respect to the seized documents (Page-6 & 7). It was for the AO to controvert it and thereafter make addition in the hands of the Company. But he neglected his rightful duty and chose to make the addition in the hands of the assessee rather. Therefore, addition made by the AO in the hands of the assessee, is baseless. It has been held by the Hon’ble Supreme Court in the case of ITO vs. Atchaiah that an Income Tax Officer can and he must tax the right person and the right person alone. By ‘right person’ we mean the right person who is liable to be taxed, according to law with respect to a particular income. An AO can not have a choice to tax an income in the hands of the Director or the Company, on the basis of papers which clearly belong and pertain to the Company. When in the assessment of the Company made by the AO u/s 153C, he added the on-money on booking of flats made on this land, why he chose not to make the addition of on-money for the purchase of this land in the hands of the company is not understood? The Ld.DR further submitted that these papers (Page-6 & 7) were found from the premises of the assessee. The premises, viz. C- 9, Ballabh Bari, Kota, is a three storied building. The ground floor is exclusively the office of various concerns of the assessee, from where seizure of all the material, be it of the proprietory concerns, partnership concerns or companies, was made. The first and the second floor was used by the assessee, as his residence. As a matter of fact, all the papers as per Annexure-AS (32 exhibits) were found from the premises of the assessee. Then why addition on their basis has been made by the AO in the hands of the Company. Obviously for the reason that they belonged to the Company. On similar lines, addition, if any, was required to be made in the hands of Millenium Buildhome Pvt. Ltd. Much importance was given by the AO/CIT(A) and the DR to the statements of the assessee and Shri R.K.Verma, deposing that the impugned amount (16.5 crores) was paid to settle the dispute that arose between them. The assessee and Shri Verma later retracted their statements on this aspect. I would like to draw your Honor’s kind attention to the Joint venture Agreement and supplementary deed 84 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT dated 25.02.2011 vide which it was made clear that the assessee had no stake in 60% of the undivided plot. So, when the terms of the JV were explicitly clear and unambiguous, there arose no question of making a claim for stake in 60% of land by the assessee. Then why would Shri Verma give compensation and the assessee take?” 10. We have heard the rival contentions and perused the material placed on record. In this appeal the assessee has raised seven grounds of appeal which are legal in nature and merits of the two disputed addition made by the ld. AO. The first issue is related to the cessation of liability of Rs. 15 crore and the second one relate to unexplained payment of 2,65,99,000 being the alleged cash transaction between M/s. Millenium Build Home P. Ltd and M/s Nevralji Estate P. Ltd. 11. As is evident from the facts of the case narrated herein above that disputes arise because the revenue collected some documents in that search and those documents were considering being the nature of incriminating and that is why the additions were made and the assessee disputes that finding of the lower authority that out of two addition one addition is not relates to the incriminating material and other relates a company where the assessee is a director. Since the basis of that material and nature of addition as to why the same were discussed here in facts in the facts part in Para 2 above we do not replicate the same here again. 85 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT 12. Vide ground no. 1(i) and 2(ii) the assessee challenges the proceeding initiated against the assessee under the provision of section 153A and submit that the same should have been done u/s. 153C of the Act. That issue has already been discussed at length by the ld. CIT(A) while dealing with the appeal of the assessee. Records reveal that during the search at the premises of the assessee Exhibit 08 was found and at page 6 the alleged transaction being the in the nature of incriminating transactions and therefore, out of the two additions so made one relates to the material found from the premises of the assessee and that requires an investigation about the nature of the investment and whether the same relates to that company or not. Therefore, in that matter of the facts initiation of the proceedings is based on the document found and therefore, we see no reasons to deviate from the detailed finding so recorded by the ld. CIT(A) while dealing with this ground of appeal and therefore, the same are dismissed. 13. Now coming to the facts of the case regarding addition disputed by the assessee vide ground no. 4, 5 and 6 vide which the assessee challenges the finding of the lower authority in making and sustaining the addition of Rs. 15,00,00,000/- without considering the decision of the apex court in the case of PCIT Vs. Abhisar Buildwell P. Ltd.(supra) by the ld. AO 86 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT who made the same u/s. 41(1) of the Act whereas while confirming that finding of the ld. AO, ld. CIT(A) has changed the section while making the addition from 41(1) to 56(2)(vii) of the Act. Records reveal that apple of discord start from the page no. 56 of Exhibit-17 of Annexure-AS. That page is duly reflected as scanned at page 3 of the assessment order. That document starts with the date 31.03.2013 along with that under the column amount decided it was written Rs. 20,00,00,000/-. The column to that side another column suggests the computation of interest @ 2.5 % and to that next column shows amount paid. In that paper on 31.01.2014 an amount of Rs. 15,00,00,000/- shows in the column of paid column. Further to that ld. AO noted that at page no. 93 Shri R. K. Varma has made payment of Rs. 16,50,00,000/- in the F. Y. 2013-14 and 2014-15. In the paper it was also mentioned that the amount is given without interest and will not be taken back by Shri R. K. Varma. We have noted the content of that page relied upon by the revenue. For that paper ld. AR of the assessee submitted that the alleged page belongs to which annexure is not clear from the assessment order. Not only that the impugned page 93 as referred where never been confronted to the assessee in the statement or during the proceeding before ld. AO. The bench noted the content of that paper. That paper record the fact that Shri 87 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT R. K. Varma has transferred the money amounting to Rs. 16,50,00,000/- to Nar Bharat Nirman Company (JV). He stated that the amount transferred be considered as contribution from the assessee in the JV and the said amount transferred by him will not be taken back without mutual consent and that money will remain in the JV as without interest bearing fund. Thus, this paper 93 and that of the page no 56 both records the accounts of the JV which are duly reported in the books of accounts. Not only that the case of the JV was selected under scrutiny and the reasons for selection of that case was on account of Large increase of Unsecured Loans. In that assessment proceeding on being asked the assessee submitted vide letter dated 09.05.2016 explaining the fact that the JV has accepted loan of 15 Crore in the year under consideration from Shri R. K. Varma and the same was considered and no addition was proposed by the ld. AO. Thus, the issue was very well accepted by the revenue that the money was given by Shri R. K. Varma and recorded in the books of accounts of the JV. We have also gone through the deed of dissolution dated 10.04.2015 executed between Shri Ram Kishan Varma Proprietor of Vinamra Enterprise, Kota and Shri Ajay Bakliwal Proprietor of Nav Bharat Nirman Company. Thus, it is evident that That Shri R. K. Varma Prop. Of M/s. Vinmara Enterprises & Shri Ajay Bakliwal Prop. Of M/s. Nav Bharat Nriman Co. has 88 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT made a joint venture Agreement on 14.07.2010 in the name and style of M/s. Vinmara Enterpirses and Nav Bharat Nirman Co. at kota on the land no. 1,15 & 18 admeasuring 109811 sq. mt. which was purchased by Shri Ram Kishan Varma on 26.06.2007 through a registered sale deed dated 26.06.2007. That aforesaid large Industrial Land were meant for industrial use. But according to the scheme of affordable housing of the Rajasthan Government the same could be used for residential purposes, if a given percentage of land i.e. 40 % surrendered in favour of the government for construction of house for Economic Weaker Section & Low Income Group Flats [ EWS & LIG ] and balance land can be used for residential purpose. With a view to take benefit of that scheme on that 40 % of the land as approved by Urban Improvement Trust Kota [ UIT ] under the affordable housing scheme 2009, work of affordable housing was started under the agreement dated 14.07.2010 in the Joint Venture. But later on due to misunderstanding they have executed a supplementary agreement on 25.02.2011 wherein the share of loss of Shri R. K. Varma was decided to share by him @ 100% but profit @ 50 % by the assessee. It was also decided with that agreement that the Shri R. K. Varma will make all the investment in this project which he has transferred for an amount of Rs. 15,00,00,000/- in this year and 1,50,00,000/- in the subsequent year. When 89 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT the dissolution deed executed there is a reference of balance sheet dated 31.03.2015 of the JV in that audited balance sheet the money so given by Shri R. K. Varma appearing as payable. The purpose of dissolution was that the work of affordable housing was completed and said project upon completion was inaugurated by Shri Chief Minister of the State on 23.09.2013 and therefore, the business of joint venture was closed vide dissolution deed dated 10.04.2015 with taking over the said business with assets and liability [ including loss ] by Shri R. K. Varma. The accounts of the joint venture was considered as audited by a CA firm M/s. Kailash Chand Jain and Associate. As per the understating between the parties Shri Ajay Kumar Bakliwal was eligible for the remuneration at the rate of 10% of the gross receipt from UIT. The said money was payable on account of compensation of supervision of the project to the assessee. Thus as per profit and loss account of joint venture ₹4,83,83,404/- was provided which has been also credited in his capital account. The assessee considered that receipt in the financial as work receipt in the accounts and there is no dispute for offering that receipt by the assessee. The money that was payable on the balance lying in the books of the JV was settled. Against the amount receivable by the assessee he has taken a property worth Rs. 2,99,11,480/- in the form of Commercial Plot no. C1 & C-2 and balance 90 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT amount was paid through cheque and thereby the account of the assessee was settled in the JV as full and final settlement. Thus, all these records does not deal about any money to be payable out of books to the assessee and all the transaction are recorded in the books of account of the assessee including the supervision fees. Thus, how can a loan liability of Rs. 16,50,00,000/- reflected in the books of the JV wherein the assessee has share in profit @ 50 % be considered as cessation of liability in his individual capacity when the confirmation of that amount outstanding is given by Shri R. K. Varma and the same were also confirmed when the revenue was specifically deal with this fact and the ld.AO asked the fact by issuing notice u/s. 133(6) to Shri R. K. Varma wherein he has confirmed that loan of Rs. 16,50,00,000/- reflected in the books of the JV is receivable by him. With the above discussion on fact and since the ld. AO made the addition by relying on the provision of section 41(1) of the Act we think it appropriate to deal with that provision herein below; Profits chargeable to tax. 41. (1) Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee (hereinafter referred to as the first-mentioned person) and subsequently during any previous year,— (a) the first-mentioned person has obtained, whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, the amount obtained by such person or the value of benefit accruing to him shall be deemed to be profits and gains of business or profession and accordingly chargeable to income-tax as the income of that previous year, whether the 91 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT business or profession in respect of which the allowance or deduction has been made is in existence in that year or not; or (b) the successor in business has obtained, whether in cash or in any other manner whatsoever, any amount in respect of which loss or expenditure was incurred by the first-mentioned person or some benefit in respect of the trading liability referred to in clause (a) by way of remission or cessation thereof, the amount obtained by the successor in business or the value of benefit accruing to the successor in business shall be deemed to be profits and gains of the business or profession, and accordingly chargeable to income-tax as the income of that previous year. Explanation 1.—For the purposes of this sub-section, the expression \"loss or expenditure or some benefit in respect of any such trading liability by way of remission or cessation thereof\" shall include the remission or cessation of any liability by a unilateral act by the first-mentioned person under clause (a) or the successor in business under clause (b) of that sub-section by way of writing off such liability in his accounts. Explanation 2.—For the purposes of this sub-section, \"successor in business\" means,— (i) where there has been an amalgamation of a company with another company, the amalgamated company; (ii) where the first-mentioned person is succeeded by any other person in that business or profession, the other person; (iii) where a firm carrying on a business or profession is succeeded by another firm, the other firm; (iv) where there has been a demerger, the resulting company. Considering the facts as discussed herein above and the provision of the Act it is clear that the assessee has not received any remission in the year under consideration on the liability on account of any claim made in the earlier year and the transaction as alleged is duly reflected in the books of the JV and Shri R. K. Varma the provision of section 41(1) cannot apply in the facts of the case and therefore, we see no reason to sustain the addition made by the ld. AO and therefore, we direct the ld. AO to delete the same. 92 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT As regards the change of section from 41 to 56(2)(vii) made by the ld. CIT(A) we would first deal with that provision of the Act which reads as under Income from other sources. 56. (1) Income of every kind which is not to be excluded from the total income under this Act shall be chargeable to income-tax under the head \"Income from other sources\", if it is not chargeable to income-tax under any of the heads specified in section 14, items A to E. (2) In particular, and without prejudice to the generality of the provisions of sub- section (1), the following incomes, shall be chargeable to income-tax under the head \"Income from other sources\", namely :— (i) dividends ; xx xx xx xx (vii) where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009 but before the 1st day of April, 2017,— (a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum; (b) any immovable property,— (i) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property; (ii) for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration: Provided that where the date of the agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement may be taken for the purposes of this sub-clause: Provided further that the said proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by any mode other than cash on or before the date of the agreement for the transfer of such immovable property; (c) any property, other than immovable property,— (i) without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property; (ii) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration : Provided that where the stamp duty value of immovable property as referred to in sub-clause (b) is disputed by the assessee on grounds mentioned in sub-section 93 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT (2) of section 50C, the Assessing Officer may refer the valuation of such property to a Valuation Officer, and the provisions of section 50C and sub-section (15) of section 155 shall, as far as may be, apply in relation to the stamp duty value of such property for the purpose of sub-clause (b) as they apply for valuation of capital asset under those sections : Provided further that this clause shall not apply to any sum of money or any property received— (a) from any relative; or (b) on the occasion of the marriage of the individual; or (c) under a will or by way of inheritance; or (d) in contemplation of death of the payer or donor, as the case may be; or (e) from any local authority as defined in the Explanation to clause (20) of section 10; or (f) from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10; or (g) from any trust or institution registered under section 12AA or section 12AB; or (h) by way of transaction not regarded as transfer under clause (vicb) or clause (vid) or clause (vii) of section 47. Explanation.—For the purposes of this clause,— (a) \"assessable\" shall have the meaning assigned to it in the Explanation 2 to sub-section (2) of section 50C; (b) \"fair market value\" of a property, other than an immovable property, means the value determined in accordance with the method as may be prescribed; (c) \"jewellery\" shall have the meaning assigned to it in the Explanation to sub- clause (ii) of clause (14) of section 2; (d) \"property\" means the following capital asset of the assessee, namely:— (i) immovable property being land or building or both; (ii) shares and securities; (iii) jewellery; (iv) archaeological collections; (v) drawings; (vi) paintings; (vii) sculptures; (viii) any work of art; or (ix) bullion; (e) \"relative\" means,— (i) in case of an individual— (A) spouse of the individual; (B) brother or sister of the individual; (C) brother or sister of the spouse of the individual; (D) brother or sister of either of the parents of the individual; (E) any lineal ascendant or descendant of the individual; (F) any lineal ascendant or descendant of the spouse of the individual; (G) spouse of the person referred to in items (B) to (F); and (ii) in case of a Hindu undivided family, any member thereof; 94 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT (f) \"stamp duty value\" means the value adopted or assessed or assessable by any authority of the Central Government or a State Government for the purpose of payment of stamp duty in respect of an immovable property; (viia) where a firm or a company not being a company in which the public are substantially interested, receives, in any previous year, from any person or persons, on or after the 1st day of June, 2010 but before the 1st day of April, 2017, any property, being shares of a company not being a company in which the public are substantially interested,— (i) without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property; (ii) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration : Provided that this clause shall not apply to any such property received by way of a transaction not regarded as transfer under clause (via) or clause (vic) or clause (vicb) or clause (vid) or clause (vii) of section 47. Explanation.—For the purposes of this clause, \"fair market value\" of a property, being shares of a company not being a company in which the public are substantially interested, shall have the meaning assigned to it in the Explanation to clause (vii); (viib) where a company, not being a company in which the public are substantially interested, receives, in any previous year, from any person 75[***], any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares: Provided that this clause shall not apply where the consideration for issue of shares is received— (i) by a venture capital undertaking from a venture capital company or a venture capital fund or a specified fund; or (ii) by a company from a class or classes of persons as may be notified by the Central Government in this behalf: Provided further that where the provisions of this clause have not been applied to a company on account of fulfilment of conditions specified in the notification issued under clause (ii) of the first proviso and such company fails to comply with any of those conditions, then, any consideration received for issue of share that exceeds the fair market value of such share shall be deemed to be the income of that company chargeable to income-tax for the previous year in which such failure has taken place and, it shall also be deemed that the company has under reported the said income in consequence of the misreporting referred to in sub-section (8) and sub-section (9) of section 270A for the said previous year. Following third proviso shall be inserted after the second proviso in clause (viib) of sub-section (2) of section 56 by the Finance (No. 2) Act, 2024, w.e.f. 1-4-2025: Provided also that the provisions of this clause shall not apply on or after the 1st day of April, 2025. Explanation.—For the purposes of this clause,— 95 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT (a) the fair market value of the shares shall be the value— (i) as may be determined in accordance with such method as may be prescribed; or (ii) as may be substantiated by the company to the satisfaction of the Assessing Officer, based on the value, on the date of issue of shares, of its assets, including intangible assets being goodwill, know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, whichever is higher; (aa) \"specified fund\" means a fund established or incorporated in India in the form of a trust or a company or a limited liability partnership or a body corporate which has been granted a certificate of registration as a Category I or a Category II Alternative Investment Fund and is regulated under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992) 76[or regulated under the 77[International Financial Services Centre Authority (Fund Management) Regulations, 2022 made under the] International Financial Services Centres Authority Act, 2019 (50 of 2019)]; (ab) \"trust\" means a trust established under the Indian Trusts Act, 1882 (2 of 1882) or under any other law for the time being in force; (b) \"venture capital company\", \"venture capital fund\" and \"venture capital undertaking\" shall have the meanings respectively assigned to them in clause (a), clause (b) and clause (c) of Explanation to clause (23FB) of section 10; Here also looking to the facts of the case that Shri R. K. Varma has given a loan to his JV based on the JV agreement as investment in his JV which is still outstanding and even confirmed to have been receivable from the books JV’s book wherein the assessee has no role to play how that transaction independently recorded in the books of the JV having separately assessed with PAN AABAN6092R and Shri R. K. Bakliwal be considered as income of the assessee when both the transaction has not relation with the bank account or books of the assessee and without that being not recorded by the assessee that also cannot be considered as income chargeable to tax as per provision of section 56(2)(vii) of the Act. 96 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT The bench noted that the contention of the revenue that both the parties have declared that amount under the statement recorded as per provision of section 132(4) of the Act. But as is also not disputed that both parties have retracted from their statement by filling the letter / affidavit. Therefore, considering the recent decision of our own Rajasthan High Court in the case of PCIT Vs. Esspal International P. Ltd [ 166 taxmann.com 722 (Rajasthan) ] holding that ; 11. Now it is a matter of record that Shirish Chandrakant Shah had retracted his statements given before the Assessing Officer. Even otherwise, an admission by the assessee cannot be said to be a conclusive piece of evidence. The admission of the assessee in absence of any corroborative evidence to strengthen the case of the Revenue cannot be made the basis for any addition. Therefore, the substantial questions of law framed by the appellant pertained to an open issue which stands concluded by the decision of the Hon'ble Supreme Court; one such decision was rendered in \"M/s Pullangode Rubber Produce Co. Ltd. v. State of Kerala And Another\" [1973] 19 ITR 18. We also get support of our from the decision of the apex court in the case of PCIT Vs. Abhisar Buildwell Private Limited [ 149 taxmann.com 399 (SC) ] wherein the court held that : 12. If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other material is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law. At the cost of repetition, it is observed that the assessment under section 153A of the Act is linked with the search and requisition under sections 132 and 132A of the Act. The object of Section 153A is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material, the AO would assume the jurisdiction to assess or reassess the total 97 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT income for the entire six years block assessment period even in case of completed/unabated assessment. As per the second proviso to Section 153A, only pending assessment/reassessment shall stand abated and the AO would assume the jurisdiction with respect to such abated assessments. It does not provide that all completed/unabated assessments shall abate. If the submission on behalf of the Revenue is accepted, in that case, second proviso to section 153A and sub-section (2) of Section 153A would be redundant and/or rewriting the said provisions, which is not permissible under the law. 13. For the reasons stated hereinabove, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra) and the decisions of the other High Courts taking the view that no addition can be made in respect of the completed assessments in absence of any incriminating material. 14. In view of the above and for the reasons stated above, it is concluded as under: (i) that in case of search under section 132 or requisition under section 132A, the AO assumes the jurisdiction for block assessment under section 153A; (ii) all pending assessments/reassessments shall stand abated; (iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and (iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs. Civil Appeal Nos.7738-7739/2021, 7736-7737/2021, 7732-7735/2021 and 7740-7743/2021 15. Insofar as the aforesaid Civil Appeals preferred by the assessee – M/s Kesarwani Zarda Bhandar Sahson, Allahabad are concerned, these appeals have 98 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT been preferred against the impugned judgment and order dated 6-9-2016 passed in ITA Nos. 270/2014, 269/2014, 15/2015, 16/2015, 268/2014 and 17/2015, as also, against the order dated 21-9-2017 passed in the review applications. It is required to be noted that the issue before the Allahabad High Court was, whether in case of completed/unabated assessments, the AO would have jurisdiction to re-open the assessments made under section 143(1)(a) or 143(3) of the Act, 1961 and to reassess the total income taking notice of undisclosed income even found during the search and seizure operation. 15.1 In view of the discussion hereinabove, once during search undisclosed income is found on unearthing the incriminating material during the search, the AO would assume jurisdiction to assess or reassess the total income even in case of completed/unabated assessments. Therefore, the impugned judgment(s) and order(s) passed by the High Court taking the view that the AO has the power to reassess the return of the assessee not only for the undisclosed income, which was found during the search operation but also with regard to material that was available at the time of original assessment does not require any interference. Under the circumstances, the aforesaid appeals preferred by the assessee – M/s Kesarwani Zarda Bhandar, Sahson, Allahabad deserve to be dismissed and are accordingly dismissed. In the facts and circumstances of the case, no costs. Civil Appeal Nos. 15617/2017, 10267/2017, 10266/2017 & 10268/2017 16. Insofar as the aforesaid appeals filed by the assessee – Dayawanti through legal heir against the impugned common judgment and order dated 27-10-2016 passed by the High Court of Delhi at New Delhi in ITA Nos. 357/2015, 358/2015, 565/2015 and 566/2015. The question before the High Court was, whether the Income-tax Appellate Tribunal was justified in upholding the addition made on the basis of the incriminating material during the course of search. 16.1 In view of the aforesaid discussion and the reasoning, all these appeals filed by the assessee – Dayawanti through legal heir fail and the same deserve to be dismissed and are accordingly dismissed. No costs. Thus based on the discussion so recorded herein above considering the decision of the apex court we see no reason to sustain the addition even as per the provision of section 56(2)(vii) of the Act as the transaction as alleged never been subjected to credit in the books of the assessee. In the result ground no. 4, 5 & 6 raised by the assessee are allowed. 99 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT 14. Ld. AO noted that while search proceeding carried out as per provision of 132 of Act at the residence of the assessee document inventorised at page no. 6 to 9 of Exhibit 08 was found. The detailed facts, contention and reply on the issue has already been discussed in para 2.3 herein above we deal on the brief of it that the said documents payments notes the transaction made between M/s Nevaji Estates (P) Ltd., and Millenium Buildhome Private Limited. As per the document seized, part payment have to be made in white (ek number) and part payment has to be made in black. In white Rs. 2,13,90,000/- has to be paid while as per black Rs. 4,80,00,000/- has to be paid. In ek number cost has been taken at 400 whereas as per black cost has been taken at 885. An amount of Rs. 2,00,00,000/- has been paid in black and Rs. 65,99,000/- has to be paid in black. Thus, it is inferred that an amount of Rs. 2,65,99,000/- have been paid in cash by the assessee and thereby the same was added in the hands of the assessee as per provision of section 69 of the Act. As the addition was made u/s. 69 of the Act we would like to refer that section ; Unexplained investments. 69. Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if 100 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year. Record reveal that the transaction recorded is the investment of M/s Millenium Buildhome Private Limited and as informed in the open court that the case of that company i.e. Millenium Buildhome Private Limited opened as per provision of section 153C of the Act. Thus, it is clear from the record that there is no investment made by the assessee in respect of the property as referred and revenue has already based on that seized paper taken an action to tax that amount as per provision of section 153C of the Act we see no reason to considered as unexplained investment of the assessee when the said investment undisputed is the investment of that Millenium Buildhome Private Limited. The contention raised by that company that this record is nothing but a deaf and dump would automatically does not mean unexplained investment of the assessee in that property when that Millenium Buildhome Private Limited is separately assessed to tax and the assessee merely is the director of that company cannot be considered to have made the unexplained investment in the hands of the assessee. When the matter carried before the learned Commissioner of income tax he has confirmed the addition merely on the fact that considering 101 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT papers found in possession of the assessee it reveals that the same must have been paid by the assessee from unaccounted income on which no tax has been paid and could have never offered for taxation had the income tax search action not been carried out in his case. Thus he has not disputed the fact that the purchase of the property is in the name of Millenium Buildhome Private Limited. Considering that fact particularly not disputed by the revenue that the purchase and sale of property between the two separate legal entity where the role of the assessee is only director in the company named Millenium Buildhome Private Limited who is purchaser of that property cannot be taxed in the hands of the assessee. If at all that is to be taxed same be taxed in the hands of that Millenium Buildhome Private Limited and not in the hands of the assessee when the revenue has already taken a step to tax that transaction by invoking the provision of section 153C of the Act. Based on these observation ground no. 7 raised by the assessee is allowed. 15. Since we have considered the grounds of appeal of the assessee on its merit the ground challenging the technicality of approval not proper becomes academic and therefore, the same is not decided. In the result, the appeal of the assessee is partly allowed. 102 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT 16. The facts of the case in ITA no. 1277/JP/2024 is similar to the case in ITA No. 1276/JP/2024 and we have heard both the parties and persuaded the material available on record. Therefore, it is not imperative to repeat the facts, various grounds raised by the assessee and the arguments of both the parties in ITA no. 1277/JP/2024. Hence, the bench feels that the decision taken by us in ITA No.1276/JP/2025 for the Assessment Year 2014-15 shall apply mutatis mutandis in the case of the assessee Shri Ajay Bakliwal in ITA No. 1277/JP/2024 for the Assessment Year 2015-16. Based on this observation ground no. 1 & 2 raised by the assessee is dismissed. Ground no. 3 becomes academic, and ground no. 3,4 & 5 are allowed. Ground no. 7 being general does not require any adjudication. In the result the appeal of the assessee in ITA no. 1277/JP/2024 stands partly allowed. Order pronounced in the open court on 11/04/2025. Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 11/04/2025 *Ganesh Kumar, Sr. PS vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Ajay Bakliwal, Kota 103 ITA Nos.1276 & 1277/JP/2024 Ajay Bakliwal vs. ACIT 2. izR;FkhZ@ The Respondent- ACIT, Central Circle, Kota 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (ITA Nos. 1276 & 1277/JP/2024) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar "