TaxTMI 
TaxTMI 
2009 (7) TMI 911
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....ing and relevant documentary evidence was also produced before him. (iii)On facts and in law, the learned CIT (Appeals) has totally ignored the fact that the assessee's brother had constructed the house primarily by taking loan from the bank and the deptt. Has nowhere established that any investment, over and above that satisfactory explained by the owner through his statement under section 133A, had been made by the assessee and the surrender had clearly been made under coercion to buy peace only and was later-on retracted. (iv)On facts and in law, the ld. CIT (A) has erred in failing to adjudicate on grounds concerning initiation of penalty and charging of intt. under various heads though assessee had not committed any default. 2. Rival contentions have been heard and record perused. Facts in brief are that assessee was carrying on wholesale cloth business. There was a search at his business premises, wherein physical inventory was taken. Statement of the assessee was also recorded and he was asked to explain entries and shortcomings in the books of account. Enquiry was also made with regard to ownership of building No. 2195/5, Rama Colony, in which assessee was a tenant and c....
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....the period approximately one year back. The sources of investment in purchase of plot and construction thereon are as under:- (i) Loan from Oriental Bank of Commerce i.e., College for women, Rohtak's Branch in the month of Feb., 2004 Rs. 9,90,000.00 (ii) Rs. One lakh withdrawn from Gugnani Trading Co. on 25-9-2004 Rs. 1,00,000.00 (iii) Rest of the amount was contributed from my family members i.e., wife & son etc. (iv) The investment in purchase of plot was made by withdrawing the same from accounts with M/s. Gugnani Trading Co., Rohtak for the year 2002-03. (copy enclosed). Q.3 Whether you have kept construction account to support your contention regarding total investment in construction ? Ans. We have taken loan from bank and all the purchase bills etc. were deposited with the bank. No separate account for this purpose has been kept." 4. After recording the statement of the assessee and his brother, the survey team left the business premises on 5-11-2004 and the assessee was asked to attend the office on the next day i.e., 6-11-2004. On the next day, when the assessee attended Assessing Officer's office, his statement was again recorded. In the s....
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....to the investment made by Sh. Devinder Kumar out of undisclosed income of financial year 2004-05 from my proprietary firm M/s. Gugnani Trading Co. Therefore, to buy peace of mind and avoid litigation, I surrender an additional income of Rs. 22,90,000 assessable in the hands of my said firm for the assessment year 2005-06. This surrender will be in addition to an over and above the normal income of my said firm. I am ready to pay additional tax liability on the said surrender income as advance tax for the financial year 2004-05 as per the provisions of Income-tax Act relating to payment of advance tax." 6. While concluding the statement, the assessee's surrender is mentioned in the following words :- "In the above manner, total surrender in the hands of Gugnani Trading Co. comes as under :- (i) Building A/c Rs. 22,90,000.00 (ii) Stock A/c & Cash A/c Rs. 15,34,000.00 Total Rs. 38,24,000.00 The above surrender will be subject to non-initiation of penalty and interest and litigation of prosecution. Further stated that advance tax liability on the additional income, as above, will be paid in accordance with the provisions of Income-tax Act, 1961." 7. Th....
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....ct state of affairs and to substantiate his stand that investment in the building was more than what has been recorded/disclosed by Shri Devinder Kumar who is the owner of the building. We also found that statement with regard to investment in building No. 2195/5 was recorded on the next date of survey and the assessee was compelled to admit the investment in property of which the assessee was not the owner. Nothing was found during the course of survey to indicate that assessee has either incurred himself any expenditure on the construction of building nor that he has advanced the money to his brother for construction of the building, which was not found to be recorded in the books of account. Even the CIT(A) while upholding the addition on account of surrender made on account of investment in building did not refer the matter to the DVO to find out if any excess investment was made in the building as compared to the investment shown by Shri Devinder Kumar, brother of the assessee who was separately assessed. Had the department any evidence to suggest that investment made in the building was more than what was stated by Shri Devinder Kumar, the department have all the rights to ma....
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....ase of CIT v. S. Khandar Khan Chand [2008] 300 ITR 157 , observed that where assessee has admitted suppressed income but there was no documentary evidence in possession of the department, no addition can be made on the basis of such statement. The Hon'ble High Court reviewed all the available judgments on the point along with CBDT Instructions dated 10-3-2003, and went to the extent of holding that section 133A does not empower any IT authorities to examine any person on oath and hence, such statement has no evidentiary value and any admission made during such statement cannot by itself be made the basis for addition. After considering the proposition of law laid down in the cases of Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 (SC), Dr. S.C. Gupta v. CIT [2001] 248 ITR 782 (All.), Paul Mathews & Sons' case (supra ) and CIT v. G.K. Senniappan [2006] 284 ITR 220 (Mad.), the Hon'ble High Court held that an admission is an extremely important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect and that the assessee should be given a proper opportunity to show that the b....