TaxTMI 
TaxTMI 
2010 (12) TMI 816
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....assessee refused to file the affidavit before the Tribunal in compliance of the order sheet dated 27-10-2010. 3. The brief facts of the case are that the partnership firm M/s. Naroli Developers was formed in the year 1994-95 for the business of land dealings and real estate business. In the year 1994-95 the firm had made certain advances for purchase of lands. A major advance of Rs.17,95,000/- was made to one Mr. I. B. Parmar. Advance of Rs.2,00,000/- was made to one Mr. Nanabhai Mithabhai Patel and a further amount of Rs. 40,000/- was given to Mr. C. B. Patel. All these advances appear in the balance sheet of the firm as on 31-03-2005 as advances given. On 09-03-2005, a survey was conducted u/s 133A of the IT Act on the business premises of assessee firm in which Mr. Nitin V. Kopikar, one of the partners of the firm. During the course of survey, statement of the said partner was recorded wherein he had admitted to undisclosed income of Rs.15,00,000/- in respect of this assessee firm. The assessee firm filed its return of income for the assessment year 2005-06 declaring Nil income i.e. the assessee did not declare the income of Rs.15,00,000/- accepted by him in the statemen....
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....ITR 843, 849 (AP) 6. Fakir Mohmed Haji Hasan vs CIT 247 ITR 290 (Guj). 4. The addition was challenged before the learned CIT(A) and detailed submissions were submitted to show that Mr. Kopikar had given his statement under coercion and pressure of the survey team. It was explained that his affidavit dated 19-01-2007 retracting from earlier statement copy of which was annexed to explain that he was uneasy at the time of statement and was running very high blood pressure. It was, therefore, explained that statement was recorded under duress and coercion. It was further submitted that the transaction for purchase of land from Mr. I. B. Parmar did not materialize because permission for sale of the land was denied by the Collector of Dadra and Nagar Haveli. It is a case of the assessee that since they never had any land, therefore, question of developing the same and incurring the development expenses would not arise. The assessee's Counsel further submitted before the learned CIT(A) which is reproduced in the impugned order as under: "1. The alleged loose leaf sheet at serial no.4 of Annexure BF-1 was also prepared under the directions and coercion of the survey....
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....assessee is purchasing land, developing it and sale it. Considering this fact, it is well establish that the assessee has expended Rs.15,00,000/- in its own land purchased out of books of accounts and expended Rs.15 lacs out of books of accounts and sold the same out of books of account. Considering the prevailing market fluctuation, the assessee must have earned 30% of the Development charges incurred, which gives the conclusion that the assessee must have sold such unaccounted purchased land at a sum of Rs.20,00,000/- which would fetch additional sum of Rs.5,00,000/- to the assessee, which consist of cost of land purchased and profit earned. Since the purchase cost and sale price also unaccounted, the entire amount of Rs.5,00,000/- is added to the total income of the assessee as profit earned on sale of such plot of land which has been developed by it and inclusive of purchase not reflected in the books of accounts. 4. The letter dated 8/10/2007 of the A. O. was sufficiently and clearly replied to by the appellant firm vide our letter dated 14th November, 2007 stating therein that the appellant's deal for purchase of land did not materialize and hence they do not own any ....
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.... A. O. has not even attempted to do so. He could have easily obtained such information from the office of the Sub- Registrar, Silvasa." 5. The assessee further explained that the survey team exceeded their right to record the statement on oath which is beyond their powers. The decisions relied upon by the AO were also explained. It was ultimately explained that no addition be made against the assessee. The learned CIT(A) however, did not accept the contention of the assessee because the partner of the assessee firm in his statement accepted and declared unaccounted development expenses of Rs.15,00,000/-. It was voluntary statement and was given with application of mind after having looked at the notings on the loose paper and specific declaration was made and that retraction was made after 21 months from what has been stated on oath. Therefore, same is afterthought. The learned CIT(A) accordingly confirmed the addition and dismissed the appeal of the assessee on this issue. 6. The learned Counsel for the assessee reiterated the submissions made before the authorities below and submitted that copy of the seized document is filed at page 34 of the paper book and state....
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....in which it was held "statement made at the time of survey is not conclusive". He has also relied upon the order of the ITAT Delhi Bench in the case of ACIT vs Smt. Usha Rani Talla 6 ITR (Trib) 37 in which it was held that "no addition could be made in the hands of the assessee merely on the basis of the statement without bringing on record any material." He has submitted that since the assessee did not have any land, therefore, no addition can be made against the assessee. PB-38 and 39 are the order of the Collector refusing to grant permission to sell dated 25-7-1997. He has submitted that one of the decisions of ITAT relied on by the learned DR has been over-ruled in 14 DTR 257. 7. On the other hand, the learned DR relied upon the orders of the authorities below and submitted that the assessee never retracted from his statement made on oath and the statement of the assessee's partner was based upon the seized document found during the course of survey. He has submitted that the assessee never filed affidavit of retraction before the AO and even no copy is filed. Unless the original affidavit is filed for retraction, the case of the assessee would be deemed to be accepted....
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....also relied upon the decision of the Hon'ble Rajasthan High Court in the case of Ravindra D. Trivedi vs CIT 215 ITR 313 in which it was held as under: "Conclusion: Addition on the basis of unretracted statement of the assessee under s. 132(4) regarding excess stock was rightly made especially when the same was further corroborated by the statement of his son, who was working as a manager." The learned DR submitted that since the assessee did not cooperate before the AO and did not produce relevant materials and the parties, therefore, the addition was rightly made because the assessee's partner has also failed to retract from his earlier statement. The learned DR submitted that the decisions relied upon by the learned Counsel for the assessee are not relevant because in the present case the addition is made on the basis of seized material which is further admitted during the course of statement recorded on oath which was voluntary and without any coercion. 8. We have considered the rival submissions and material available on record. It is admitted fact that survey was conducted u/s 133A of the IT Act in the premises of the assessee firm and the seized paper ....
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....any affidavit in this regard as was directed by the Tribunal vide order sheet dated 27-10-2010. Adverse inference shall have to be drawn against the assessee in this regard. Unless the original affidavit is filed before the AO, no retraction could be made from the earlier statement. Even there is no explanation why the original affidavit was not filed before any of the specific authorities. In the absence of any affidavit from the side of the assessee, no cognizance could be taken of any of the explanations of the assessee in this regard. The assessee thus did not file any affidavit alleging under pressure or coercion for making statement during the course of survey. No evidence is also filed to prove that the seized document was planted by the survey party. Since serious allegation has been leveled against the survey party, therefore, it was incumbent on the part of the assessee to have agitated this issue before senior Income Tax Department Authorities and should have retracted from the statement and the seized material at the earlier instance and opportunity. But no such step has been taken in the matter and the assessee never disputed the correctness of the seized material and ....
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....of Surendra M. Khandhar vs ACIT 321 ITR 254 held as under: "The language of section 132(4A) of the Incometax Act, 1961, is similar to the language used in section 292C. The previsions raise a presumption that the contents of a document found during search proceedings are rue. The presumption can be rebutted. In the course of a search of the premises of the assessee a document was seized which showed that the assessee had advanced an amount of twenty lakhs of rupees. The Assessing Officer based on the seized document made an addition of Rs. 20 lakhs in the income of the assessee under section 69. This was upheld by the Tribunal. On appeal to the High Court: Held, dismissing the appeal, that there was a presumption that the contents of the documents were true, as the document was seized from the premises in the control of the assessee and the document belonged to the assessee. A reading of the document would make it clear that the document in fact was for return of money already advanced. The presumption ought o have been rebutted by the assessee. The assessee at the first available opportunity did not deny the existence of the document nor did the assessee at any su....
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....nst the Accountant who is continuing in service. The addition to income based on loose papers. It was held that the Tribunal not justified in deleting the addition without considering the fact of presumption u/s 132 (4A) and section 292C of the IT Act. It was further held as under: "Held, that the Assessing Officer after considering the overall evidence available on record rejected the explanation of the assessee that the three sets of loose sheets were fabricated and unreal documents giving cogent reasons for disbelieving the confessional statements of the two accountants. The reasoning assigned by the Commissioner (Appeals), which had been subsequently affirmed by the Tribunal for accepting the explanation of the assessee and reversing the finding of the Assessing Officer was devoid of logic. The Tribunal was legally bound to record its findings with regard to the applicability of the presumption under section 132(4A) of the Act to the assessment proceedings. This aspect was all the more significant in view of the provisions contained in section 292C, which was inserted by the Finance Act, 2007 and has been given retrospective effect from October 1, 1975 and provides for ....
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....cifically noted that in order to find out in which land the assessee has incurred such expenses; the assessee was directed to produce copy of the agreement with Shri I. B. Parmar for purchase of land and also was directed to give details of Shri C. B. Patel and Shri Nanabhai Patel to whom advances have been given. The assessee has however, shown inability to produce the above person and also did not give any detailed addresses. The assessee, therefore, deprived the AO to conduct enquiries at the assessment stage. Since the assessee did not file any proper explanation before the AO and did not cooperate in finding out the truth in the transaction, the burden upon the assessee is not discharged to rebut the presumption u/s 292C of the IT Act. The finding on deletion of addition of Rs.5,00,000/- by the learned CIT(A) have no relevance to the matter because the learned CIT(A)noted that such addition shall have to be deleted because it is made without any basis and on pure guess work. However, the addition of Rs.15,00,000/- is made on the basis of the document found during the course of survey which is supported by the statement of the partner of assessee firm. Considering the above dis....