TaxTMI 
TaxTMI 
2010 (10) TMI 29
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.... purposes of taxation. The additional income offered included a sum of Rs. 45,00,000 on account of excess stock found during the course of survey and offered by one of the partners of the respondent-assessee as additional income. The answer by one of the partners of the respondent-assessee to question No. 13 during the survey proceedings is relevant and the same is reproduced hereinbelow : "Question No. 13 : Do you have any other business concerns being run from this premises, i.e., B-70/3, Wazirpur Indl. Area ? Answer : Yes, the company known as M/s. D. M. W. P. (Ltd.) is also in operation from this premises. This company was incorporated in May, 2000" 4. It is pertinent to mention that in reply to question No. 36, which pertained to difference in stock, the partner of the respondent-assessee had stated "I cannot explain this difference now. Therefore, to buy peace of mind I am offering additional income of Rs. 43 lakhs for the current financial year, i.e., the assessment year 2005-06." 5. However, subsequently, the respondent-assessee, vide its letter dated November 29, 2004, contended that the statement about stock was incorrect and that the impugned discrepancy h....
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.... ; books of account are duly audited. With all these facts present on record, addition cannot be made ignoring the reconciliation and evidence filed by the assessee and relying only on a statement which was given due to non-availability of ready explanation. The assessee immediately thereafter furnished correct stock statement which have not been controverted by the Assessing Officer. In view thereof, we are inclined to uphold the order of the Commissioner of Income-tax (Appeals) deleting addition." 9. Ms. Suruchii Aggarwal, learned counsel for the Revenue submitted that the statement of one of the partners of the respondent-assessee recorded during the survey under section 133A of the Act had evidentiary value and the said statement could not be retracted/explained after a lapse of considerable time. 10. Before we deal with the controversy at hand, we would like to reproduce section 133A of the Act, which reads as under : "133A. Power of survey.-(1) Notwithstanding anything contained in any other provision of this Act, an income-tax authority may enter- (a) any place within the limits of the area assigned to him, or (b) any place occupied by any person in respect of....
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....iod exceeding ten days (exclusive of holidays) without obtaining the approval of the Chief Commissioner or Director General therefor, as the case may be, (ii) make an inventory of any cash, stock or other valuable article or thing checked or verified by him, (iii) record the statement of any person which may be useful for, or relevant to, any proceeding under this Act. (4) An income-tax authority acting under this section shall, on no account, remove or cause to be removed from the place wherein he has entered, any cash, stock or other valuable article or thing. (5) Where, having regard to the nature, and scale of expenditure incurred by an assessee, in connection with any function, ceremony or event, the income-tax authority is of the opinion that it is necessary or expedient so to do, he may, at any time after such function, ceremony or event, require the assessee by whom such expenditure has been incurred or any person who, in the opinion of the income-tax authority, is likely to possess information as respects the expenditure incurred, to furnish such information as he may require as to any matter which may be useful for, or relevant to, any proceeding under this Ac....
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....ion may thereafter be used in evidence in any proceeding under the Indian Income-tax Act, 1922 (11 of 1922) or under this Act. Explanation.-For the removal of doubts, it is hereby declared that the examination of any person under this sub-section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act." (emphasis supplied) 12. From the aforesaid, it is apparent that while section 132(4) of the Act specifically authorizes an officer to examine a person on oath, section 133A does not permit the same. 13. The Kerala High Court in Paul Mathews and Sons v. CIT [2001] 263 ITR 101 and the Madras High Court in CIT v. S. Khader Khan Son [2008] 300 ITR 157 have also taken a similar view. The relevant portion of the Kerala High Court judgment in the case of Paul Mathews and Sons [2003] 263 ITR 101 is reproduced hereinbelow (page 108) : "The provision also enables the income-tax authority to impound and retain in his custody for such period as he ....