TaxTMI 
TaxTMI 
2010 (6) TMI 675
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....usiness premises from her home in the night and asked to sign the statement of surrender of Rs. 20 lakhs towards renovation of the showroom and Rs. 14 lakhs cash available in a bag at shop. Thereafter, in the night, statement of Smt. Usha Rani Talla was recorded wherein she surrendered a sum of Rs. 20 lakhs on renovation and Rs. 14 lakhs cash lying at shop. The contention of the assessee was that her husband who was a partner in M/s. Vishal Jewellers, was an acute diabetic patient and was made to sit in the shop by the visiting officials for long hours and was feeling very much disturbed and depressed, when the assessee had no other choice except to sign the statement recorded by the visiting officials. A letter dated March 3, 2005 was given to the Additional Commissioner of Income-tax, Ward-25(3), New Delhi, under whose guidance survey was conducted wherein it was stated that post-dated cheques of Rs. 30,14,400 had been obtained from the assessee Smt. Usha Rani Talla, which cheques are not issued from her and she had categorically denied to have spent any amount on renovation of the showroom during the year under consideration and that cash of Rs. 14 lakhs alleged as belonging to ....
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.... Ltd. carrying on the business from the said premises on the date of survey. The survey conducted at B-5, Moti Nagar on February 24, 2005, started in the morning hours of February 24, 2005 and continued till late night. The assessee was called from her home in the night and was asked to sign the statement for surrender of a sum of Rs.20,00,000 towards renovation of the showroom and another Rs.14,00,000 as cash available in a bag. Her husband, an acute diabetic patient was made to sit in the shop by the visiting officials for long hours and was feeling very much disturbed/depressed, when the assessee had no other choice except to sign the statement recorded by the visiting officials. The assessee categorically denies to have spent any amount on the renovation of the showroom during the year under consideration, i.e., financial year 2004-05. The assessee spent about over Rs. 10,00,000 45 years earlier and the amount was spent out of the assessee's bank account. The cash of Rs. 14,00,000 in a bag available in the shop did not belong to the assessee nor any such amount was handed over back to the assessee by the visiting officials. The visiting officials concluded the survey after g....
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....oner of Income-tax (Appeals) observed that the Assessing Officer has treated Rs. 20 lakhs as undisclosed investment of Smt. Usha Rani Talla under section 69B of the Act. The provisions of section 69B can be invoked only if -It is found that the assessee has made investments or the assessee is found to be the owner of any bullion, jewellery or other valuable article, and -It is found that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the assessee, and -Either the assessee offers no explanation about such excess amount or the explanation offered by him is not satisfactory. As per the Commissioner of Income-tax (Appeals), the above circumstances are cumulative. If all these circumstances exist, the excess amount may be deemed to be the income of the assessee for the financial year in which such investment was made or the assessee became the owner of bullion, etc. The Commissioner of Income-tax (Appeals) further observed that the legal fiction enacted in section 69B comes into effect only where all the above circumstances do factually ex....
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....investment therein per se. The Commissioner of Income-tax (Appeals) also observed-that despite retraction made by the assessee from her statement of having invested Rs. 20 lakhs in the renovation of building, the Assessing Officer did not refer the matter to the Valuation Officer. As per the Commissioner of Income-tax (Appeals), the onus to prove the existence of all circumstances as mentioned in the statute lies on the Department, there is no room or scope for making any presumption about the existence of any of the circumstances. Keeping in view the phraseology of section 69B of the Act, it was held by the Commissioner of Income-tax (Appeals) that the so-called statement without any evidence cannot be made the basis for explaining the implication of the expression "expended". Thus, the addition of Rs. 20 lakhs made by the Assessing Officer on account of renovation was also deleted by the Commissioner of Income-tax (Appeals) against this order of the Commissioner of Incometax (Appeals), the Revenue is in further appeal before us. We have considered the rival contentions, carefully gone through the orders of authorities below and also perused the statement recorded during the cour....
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....s found by the Commissioner of Income-tax (Appeals) in the assessment folder and which has been dealt with in detail by the Commissioner of Income-tax (Appeals) in his appellate order. As per the letter submitted after the survey, the surrender was withdrawn immediately, which the Department agreed to and did not present the cheques for payment. With regard to surrender of Rs. 20 lakhs made in the showroom where M/s. Vishal Gold and Precious Stones Pvt. Ltd. was found to be carrying on business, no corroborative material was either found by the survey team or brought on record by the Assessing Officer to substantiate the surrender made by Smt. Usha Rani Talla. The Commissioner of Income-tax (Appeals) also observed that even after the retraction of having made any investment in the renovation, the Assessing Officer was having sufficient time to refer the matter for determining the actual value of the showroom, its cost of construction, cost of renovation, etc., but nothing was done by the Assessing Officer to find out the correct state of affairs. The Departmental valuation cell is meant to find out the correct cost of construction and which is fully supported by technical staff emp....
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....ce gathered during the course of search or thereafter while framing the relevant assessment orders. Heavily relying upon the aforesaid recommendations of the Kelkar Committee as well as directions issued by the Central Board of Direct Taxes to the field officers, it was strongly urged by learned authorised representative that admission regarding renovation expenditure and cash having been obtained by the survey party under coercion and disturbed mental state of affairs, cannot be made the basis of addition, when nothing was found or seized by the Department during survey to support the statement of lady. Furthermore, reliance was placed on the proposition laid down by the hon'ble Supreme Court in the case of Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18, wherein it was held that an admission is not conclusive and the assessee is fully entitled to rebut and controvert the admission. Furthermore, the hon'ble Supreme Court in the case of R. S. Sarwan Singh, AIR 1957 SC 637 held that the confession of an accused would need corroboration to convict the accused. The hon'ble Delhi High Court in the case of S. Arjun Singh v. CWT [1989] 175 ITR 91 held that an admis....
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....ment cannot by itself be made the basis for addition. After considering the proposition of law laid down in the case 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 and Sons v. CIT [2003] 263 ITR 101 (Ker) and CIT v. G. K. Senniappan [2006] 284 ITR 200 (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 books of account did not correctly disclose the correct state of affairs. It was also observed that in contradistinction to the power under section 133A, section 132(4) of the Act enables the authorised officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the Income-tax Act. On the other hand, whatever statement is recorded under section 133A of the Act, it is not given any evidentiary value obviously for the reason that the officer is not authorised to administer oath a....