2009 (2) TMI 830 - AT - Income Tax

Tribunal Partially Allows Appeal: Surrender Statement Invalid, Expenses Disallowed

SATISH BUILDERS Versus ASSISTANT COMMISSIONER OF INCOME TAX

The Tribunal partially allowed the appeal, accepting the assessee's argument regarding the Rs. 25,00,000 addition. The Tribunal found the addition ... - Issues Involved:1. Validity of the CIT(A) order.2. Confirmation of Rs. 25,00,000 addition.3. Confirmation of Rs. 61,743 disallowed car expenses.4. Confirmation of Rs. 31,903 disallowed telephone expenses.Summary:Issue 1: Validity of the CIT(A) order- The order passed by the CIT(A) was challenged as being 'bad in facts and in law' and sought to be quashed. However, this ground was not specifically pressed during the appeal.Issue 2: Confirmation of Rs. 25,00,000 addition- The assessee, a civil contractor, filed a return declaring an income of Rs. 16,07,709, accompanied by an audit report and supporting documents. During a survey u/s 133A on 6th March 2002, the assessee surrendered Rs. 25 lakhs, which was later retracted, claiming it was made under pressure and without proper consideration of facts.- The AO rejected the retraction, emphasizing that the surrender was made voluntarily and without any fear or stress, and that the assessee had not maintained proper books of account or stock register.- The CIT(A) confirmed the AO's decision, leading to the appeal.- The assessee argued that the surrender was coerced, no inventory was prepared during the survey, and the trading results were better than the previous year. The assessee's books were audited and accepted by the AO, with no discrepancies found.- The Tribunal noted that the addition lacked concrete material evidence and relied solely on the surrender statement. The CBDT Instruction dated 10th March 2003 advised against obtaining confessions of undisclosed income during surveys, emphasizing reliance on credible evidence.- The Tribunal found the retraction valid, as it was made immediately upon filing the return with a note explaining the coercion. The Tribunal cited Paul Mathews & Sons vs. CIT, which held that statements recorded during surveys carry no evidentiary value.- The Tribunal concluded that the addition based solely on the surrender statement, without supporting evidence, was unsustainable and accepted the assessee's ground.Issue 3: Confirmation of Rs. 61,743 disallowed car expenses- The assessee did not press this ground during the appeal, and it was rejected as not pressed.Issue 4: Confirmation of Rs. 31,903 disallowed telephone expenses- Similar to Issue 3, this ground was also not pressed during the appeal and was rejected as not pressed.Conclusion:- The appeal was partly allowed, with the Tribunal accepting the assessee's ground regarding the Rs. 25,00,000 addition and rejecting the other grounds as not pressed.