TaxTMI 
TaxTMI 
2010 (12) TMI 533
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....found on which certain transactions were written. Shri Milan Arvind Mehta the partner of the assessee firm in statement recorded at the time of survey in relation to the entries made in the said diary in response to question No.10 stated as under: Ans: The first written page is in respect of some income/cash receipts in respect of old structures demolition receipt. The second written page is in respect of some income which I can not recollect at present. Third written page is in respect of consultancy charges received for various projects and further written page is in respect of supervision charges carried out by all the partners at various places. Similarly, next page is in respect of car parking space provided in our project to various persons as we have insisted for the same. The next written page headed as Misc. income which is a receipt on account of various small job undertaken by us at various places. 3. The entries made in the diary were not recorded in the books of account. The partner in response to question No.13 further stated that since there was recession and there was no project in hand the time had been utilized by the partners who were all Civi....
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....on or any other litigation. 5. The assessee however in the return of income filed on 28.11.2003 credited the profit and loss account only by a sum of Rs.39 lacs in place of amount of Rs.45 lacs offered at the time of survey. The details of said income of Rs.39 lacs were given as under: Car Parking sale 6,50,000 Construction supervision charges 4,10,000 Other Income 1,60,000 Income from other sources 5,27,000 Miscellaneous Income 4,88,000 Old building demolition 8,20,000 Project Consultancy Fees 8,45,000 Total 39,00,000 6. The total income declared by the assessee was Rs.21,53,566/- after claiming deduction on account of interest and remuneration to the partners at Rs.9,23,471/- and Rs.15,22,000/- respectively. The AO at the time of assessment proceedings asked the assessee to explain as to why only a sum of Rs.39 lacs was declared against Rs.45 lacs offered at the time of survey. The assessee gave explanation vide letter dated 30.12.2005 which was as under: "1. The details of the various income like consultancy, construction supervision charges etc. amounting to Rs.39,00,000/- is based on the self volunta....
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....of income the additional income declared by the assessee was admitted though the quantum was reduced from 45 lacs to 39 lacs. The assessment order was passed under section 143(3) on 9.1.2006 and thereafter appeal was filed on 31.3.2006 and even till that date no dispute was raised by the assessee regarding the additional income offered at the time of survey. However, during the appellate proceedings the assessee filed an affidavit dated 11.7.2006 in which it was stated that the survey team had not found any incriminating evidence against the assessee at the time of survey. It was claimed in the affidavit that the survey authorities had asked partners to purchase a diary from a nearby shop. The new diary so purchased was rubbed in mud to make it look like an old diary. They then asked the partners to write as dictated by them. They used all the threats, pressure coercion and undue influence to declare an amount of Rs. 1 to 2 crores as undisclosed income to suit their objectives. The diary so prepared was made to be written by each of the partners and then impounded. Though the entries in diary amounted to a sum of Rs.33.73 lacs, the survey authorities used coercive pressures to make....
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....dence before the CIT(A) which had not been considered by him judicially and rejected. 9.1 The Learned AR also questioned the evidentiary value of the statement recorded under section 133A as there was no provision for recording statement on oath. No addition therefore could be legally made based on such statement. Reliance was placed on the judgment of Hon'ble High Court of Kerala in case of Paul Mathew and Sons vs CIT (263 ITR 101) and on the unreported judgment dated 4.10.10 of Delhi High Court in Income-tax Appeal No.1111/2010. Further it was also argued that no addition could be made only on the basis of statement recorded at the time of survey in the absence of any material to back such addition. Reliance was placed on the judgment of Hon'ble High Court of Madras in case of CIT vs S. Khadarkhan and Sons (300 ITR 157) and on the decision of Mumbai bench of the tribunal in case of M/s.Premsons in ITA No.4698/M/2006. In these cases, it was pointed out it was held that no addition could be made merely on the basis of statement made during the survey without any supporting material in view of the CBDT circular dated 10.3.2003. It was also submitted that the assessee had c....
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....nt of the partner (placed at pages 99 to 109 of the paper book) in which at page 109 the partner while signing the statement clearly mentioned that the statement had been correctly recorded and no undue pressure, threat or coercion had been used and that the statement had been given voluntarily. Therefore the affidavit filed after the lapse of three years had been rightly rejected as an afterthought. It was accordingly pleaded that the addition made by the AO should be upheld. 11. We have perused the records and considered the rival contentions carefully. The dispute is regarding addition of Rs.6 lacs made by the AO on the basis of statement made by the partner of the firm at the time of survey. As per the department, during the course of survey a blue diary was found in which certain transactions were written which were not entered in the books of account. The partner Shri Milan Arvind Mehta in response to question No.10 admitted that the entries made related to several activities such as demolition of old structure, consultancy charges, supervision charges, car parking space and other miscellaneous activities. The partner in response to question No.13 also stated that d....
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....lapse of more than three years from the date of survey. In the affidavit allegations have been made regarding fabrication of the diary by the survey team and that the partners were forced to write the diary as dictated by them under force and coercion. It has been claimed that there was no incriminating material found at the time of survey. The affidavit filed by the assessee is only a self serving statement and has no evidentiary value unless the contents of the statement are substantiated by the assessee. The assessee produced no material to substantiate the claim in the affidavit that the diary was fabricated and that threat, coercion and pressure was used by the department for making confession. In fact such claim is contradicted by the assessee's own statement at the time of survey in which the partner has clearly mentioned that the statement was being given voluntarily without any coercion or pressure and that the statement had been correctly recorded. It is also worthwhile to note that the affidavit has been filed after a lapse of three years from the date of survey. If it was genuine case of threat, coercion and pressure the assessee would have filed the affidavit soon afte....
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....hingra Metal Works (supra) relied upon by the Learned AR is distinguishable. In that case, the assessee had declared additional income of Rs.43 lacs due to stock discrepancy found in survey on 14.9.2009. Later the assessee vide letter dated 29.11.2009 stated that the stock statement was not correct and that there was no discrepancy. The Hon'ble High Court held that admission was not conclusive and it was open to the assessee to show that the statement was incorrect. The assessee explained the mistake in the statement by producing the relevant record and the excise register and therefore no addition was required to be made. In this case the assessee could not explain as to how the additional income was only Rs.39 lacs and not Rs.45 lacs as declared at the time of survey. The Learned AR has also placed reliance on the judgment of Hon'ble High Court of Madras in case of CIT vs S.Khadar Khan and Sons (supra) and on the decision of tribunal in case of M/s.Premsons (supra) as well as CBDT circular dated 10.3.2003 to argue that addition cannot be made only on the basis of statement if there is no supporting material. But in this case addition has not been made only on the basis of stateme....