TaxTMI 
TaxTMI 
2009 (8) TMI 675
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....as surrendered by the respondent on oath ? (b) Whether on facts and in the circumstances of the case, the Tribunal was justified in upholding the order of the Commissioner of Income-tax (Appeals) deleting the addition of Rs. 24,49,707 made by the Assessing Officer on account of excess stock found at the time of survey and surrendered by the respondent on oath ? (c) Whether on the facts and in the circumstances of the case, the conclusion reached by the Tribunal are vitiated by irrelevant considerations or made from prejudice ?" 3. Briefly stated, the facts of the case are that the respondent-assessee filed return for the assessment year 2000-01 declaring a total income of Rs.1,52,250. The return was processed under section 143(1) of the Act. The assessee derives income from the wholesale business of manufacturing and sale of utensils in the name of "M/s. Kesar Metals, Durg." The assessee had also shown income of Rs. 78,700 from agriculture. During the relevant accounting period, survey under section 133A of the Act was conducted in the premises of the assessee as well as in the business premises of "Kesar Bartanwala", a retail shop of utensils under the ownership of the as....
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....ssessing Officer (for short "the AO") did not accept the contention of the assessee and also did not take cognizance of the assessee's letter dated January 31, 2000, retracting his admissions on the ground that the same was an attempt to retract his admissions made before and during the survey and the facts unearthed during the survey. Retraction was made after more than three months from the date of the survey and the assessee created foundation for backing out his earlier admissions in this period. Figures of purchase and sales during April 1, 1997, and October 21, 1999, were not taken by the survey team as the assessee himself voluntarily came forth and declared his undisclosed income and offered to permit him to pay tax thereon. He also paid an amount of Rs. 3,00,000 towards advance tax on October 25, 1999 and October 28, 1999. Voluntary disclosure of undisclosed income and payment towards advance tax of Rs. 3,00,000 immediately thereafter establishes that earlier admissions were voluntary and unintentional. Explanation regarding the amount of Rs. 3,00,000 found in the coffer (tijori) was also disbelieved on the ground that the same was not disclosed in his initial statem....
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.... assessee did not maintain books of account. All the books of account and other material found during the survey were inventorized at the time of survey and no vouchers/back-up material was found. The books of account were prepared during the course of regular business and even the alleged primary records were neither found available at the time of extensive survey nor the same were produced during the post-survey proceedings and the entire material was subsequently created. Vouchers produced by the assessee were for the alleged transactions made 2-3 days prior to the survey and the same were not available at the premises during the survey. The Commissioner of Income-tax (Appeals) allowed the reliefs assuming that the assessee being in regular business must be having primary records, however, it was the responsibility of the assessee to prove that he had primary records. Out of total purchases of Rs. 27,29,655 for the accounting year, the purchases to the tune of Rs. 14,50,664 was made in the month of survey and preceding two months and all the purchases were made on credit which also creates suspicion about the genuineness of the primary records produced by the assessee. The stock....
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....000-01 from undisclosed sources. The assessee made reference of "bahikhata" in his statement recorded during the survey. Whatever was found during the survey and entered in the account books was treated as income from undisclosed sources. The asses-see had submitted that he had no other source of income except the business income and in the survey proceeding also no evidence was found to show that the assessee had other sources of income. The stocks discovered during the survey were also utensils, which is the business of the assessee. The above fact was explained by the assessee in writing, vide his explanation dated November 20, 2002. The assessee had categorically stated that he would prepare the books of account. The fact that primary records like purchase bills, sales bills, electricity bills, bank pass book, etc., were kept in almirah, was also disclosed by the assessee in his letter dated November 20, 2002. The assessee had already filed his letter of retraction on January 31, 2000. Stocks found on October 21, 1999 were held to be excess after deducting the balance stock as on March 31, 1997 without considering the purchases and sales during the intervening period. Who....
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....formation. The survey party is not entitled to do. If the survey party had merely collected the information and verified the things found in the course of the survey and pass on the information to the Assessing Officer, so as to draw such inferences as he may deem fit, in the course of assessment proceedings. 14. Relying upon the judgment in the matter of Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 (SC) it was argued that admission is an important piece of evidence but it cannot be said that it is conclusive. It is open to the person who made the admission to show that it is incorrect. Further, relying upon the judgment in the matter of Asst. CIT v. Satya Narayan Agarwalla [2002] 255 ITR (AT) 69 (Kolkata) it was argued that addition cannot be made only on the basis of admissions recorded under section 133A of the Act without any corroborative evidence. The only occasion when the assessee's own statement can be used as an evidence against himself is the statement recorded under section 132(4) during the course of search and seizure operations, and by virtue of specific legal provision to this effect in section 132(4) itself. The general rule of ev....
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.... his cash and stock holding unless income has been generated. We find force in the contention of the learned Commissioner of Income-tax (Appeals) that the cash and stock having been found in excess could have been found in excess only on the basis of books of account if at all were available on the date of survey. The intervening 2\xba years could not be the source of making an addition which otherwise has been given credence by the Assessing Officer by enhancing the GP rate by way of regular acceptance of the very books of account against which he refuses to adjust the excess stock and the cash. This clearly indicates the contradiction in the Assessing Officer's mind and deserves no further deliberation. The assessee was having the necessary material on the basis of which books of account for the period after April 1, 1997 could be prepared. The assessee filed the returns after preparing the books of account for the assessment years 1998-99, 1999-2000 and 2000-01. The return for the assessment year 1998-99 was filed on November 26, 1999. The assessment was completed on February 11, 2003. In the assessment order the Assessing Officer had discussed the fact regarding survey un....
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....ng that the assessee was fortified with the sales-tax documents which directly supported the holding of stock by way of regular business transaction and not income having remained undisclosed in the intervening period. The enclosures from the debtors and creditors also could not lead to any discrepancy which the learned counsel before us has submitted by way of voluminous paper books as were before the Commissioner of Income-tax (Appeals). Therefore, keeping in view all these considerations we are inclined to agree with the action of the learned Commissioner of Income-tax (Appeals) in deleting the addition of Rs. 30,83,460 towards undeclared cash and stock made by the Assessing Officer." 19. From a perusal of the order of the Assessing Officer it appears that the Assessing Officer disregarded the books of account produced by the asses-see during the assessment proceedings under section 143(3) of the Act for the period after April 1, 1997 and other primary records solely on the ground that the assessee had made confessional statement during the survey proceedings and voluntary payment of tax against the income from undisclosed sources surrendered during the survey proceedings in ....
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....e Assessing Officer, to demonstrate that subsequent retraction by the assessee of his earlier admissions was an afterthought. Books of account prepared on the basis of primary records were in fact cooked-up documents and the same were got prepared by the assessee just to escape from the effect of his confession. Relying upon the principles of law laid down in the matter of Dr. S. C. Gupta [2001] 248 ITR 782 (All) it was argued that additions made on the basis of statement recorded as per the provisions of section 133A(3)(iii) of the Act is sustainable in law. Further, relying upon the judgment in the matter of CIT v. Durga Prasad More [1969] 72 ITR 807 (SC) it was argued that where the assessee fails to satisfactorily explain the excess cash and stock found during the survey, as required under sections 69 and 69A of the Act, it may be deemed as the assessee's income. 22. On the other hand, Mr. Moolchand Jain, learned counsel appearing for the respondent argued that findings of fact recorded by the Assessing Officer has been reversed by the Commissioner of Income-tax (Appeals) after considering the material produced by the assessee before the STO and also after consid....