TaxTMI 
TaxTMI 
2012 (10) TMI 256
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.....2008 during the course of search and seizure operation in the case of Shankar Gutkha group. At the time of survey, an excess stock of Rs,37,11,782/- was worked out by the survey party on the basis of a provisional trading account prepared, Since partner of the appellant firm could not explain excess stock of Rs. 37,11,782/-, the same was surrendered and they agreed to pay taxes on the value of excess stock. At the time of survey, an excess cash of Rs. 2,14,000/- was also found and the same was also declared by the partners of the firm as the income of firm other than its regular income. After the survey operation, the appellant firm filed a return of income declaring an income of Rs. 2,60,620/-, In this return of income, the amount of excess stock disclosed during the survey amounting to Rs,37,11,782/- was not found to be included by the AO, Similarly, the AO has also noted that an excess cash of Rs. 2,14,000/- found during the survey and declared by the partner of the firm as the income of the firm other than its regular income, was not included. In view of these findings, the AO relying on the report of survey found that books of account of the appellant was not maintained corre....
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....782/- before the ld. CIT(A) and filed the written submissions also. In the written submissions, it has been pointed out that that the 'provisional trading account made by the survey party to arrive at the excess value of the stock was not correct because the sale and purchase figures were not correctly worked out. In this written submission, working out of sale and purchase figures was made on the basis of the impounded bills and the value of the sales was arrived at Rs. 67,58,352/- and the value of purchase was arrived at Rs. 71,79,376/-. After working out the revised figure of sale and purchase on the basis of the impounded bills, it was shown that the excess figure of stock was coming to only Rs. 1, 11,242/- taking, into account the figure of excess stock of Rs. 6,60,000/included in the profit & loss account filed alongwith the return of income. The Ld. AR pointed out that the assessee has already surrendered the value of 160 bags of Rs. 6,00,000/- while finalizing its final account which was well reflected in the details filed along with the trading account. On the basis of revised computation of sale and purchase filed in the written submission, it has been pleaded that no....
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....s. 49,00,581/- should be explained as shown in the provisional trading account prepared by you and supporting documents should also be produced during hearing on the basis of which this figure of purchase has been computed by you. (ii). The basis for computation of sales of Rs. 74,20,097/- should be explained and supporting document should also be produced during the hearing on the basis of which this figures of sales has been computed by you. (iii). Provide your specific comments on the computation of sale and purchase given by the Ld. AR in his written submission. His computation is correct or not and if it is not correct what are the specific defects in the computation of Ld. AR should be specifically mentioned. (2). As against the addition of Rs. 2, 14,0001- u/s 69A for the excess cash found during survey, it has been submitted by the Ld. AR in the written submission that this cash was surrendered by the partner Mr. Neeraj Maheshwary in his hand. In support of this argument, the statement given by him during the course of survey operation is a/so enclosed in the written submission at page no.9 wherein it has been shown to me that he stated that this c....
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....it is held that confessing statement is the best evidence. The Hon'ble Supreme Court in the case of Narayan Bhagwantrao Gosavi Balajiwale vs. Gopal Vinayak Gosavi AIR 1960(SC) 100 and Thiru John Vs. Returning Officer, AIR 1977(SC) 1724, 1726 an admission, made clearly and unequivocally, is the best evidence against the party making it and though not conclusive, shifts the onus on to the maker on the principle that what a party himself admits to be true may reasonably be presumed to be so and until the presumption was rebutted, the fact admitted must be taken to be established. The above conclusion is also supported by following court decisions - (Jindal Photo Films Ltd. Vs. DCIT(1998) 234 ITR 170, 177, 178-179(Del). 2. During the course of survey a sum of Rs. 2,14,000/- cash was found in excess which was surrendered by the partner Shri Neeraj Maheshwari. In his statement at page no.7(copy enclosed) the partner Shri Neeraj Maheshwari has surrendered Rs. 39,25,782/-Rs. 37,11,782 + Rs. 2,14,000) in the hands a firm M/s Maya Trading Co. After considering the survey report of the ADI in which it was clearly mentioned that the sum of Rs. 2,14,000/-....
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....ures of purchase and sale as shown by him in his written submission, no additional documentary evidence have been deduced by him and therefore, either the AO should justify his own figure of purchase of Rs. 49,00,581/- and sale figure of Rs. 71,39,376/- based on supporting documentary evidence or he should comment on the correctness of the sale and purchase figures worked out by him on the basis of impounded sale bills. In view of the objection raised by the Ld. AR in his rejoinder filed on 15.06.2011, the AO was further asked to submit his report on the computation of sale and purchase figure shown in provisional trading account. In response to my direction, the AO has further submitted his report vide his letter F. No. ACIT/CC/Maya Tdg/Remand/11-12 dated 22.06.2011 and the same is reproduced as under:- "In continuation of remand report filed and explanation asked on 15.6.2011 in connection with the figures of provisional trading account worked out during the course of survey it is submitted as under: (1) That the figures of purchases Rs. 49,00,581/- and sales of Rs. 74,20,097/- worked out by survey team were re-examined with the impounded material. It was notice....
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.... F seems to be wrongly added in the figures of provisional trading account and, therefore, after deducting the consignment sales, the figures of sales comes to Rs. 67,33,344/- through the figures of sales reported by the appellant was at Rs. 67,58,352/-. During the course of hearing on 28.06.2011, the AO has agreed to take sale figure at Rs. 67,58,352 shown by the Ld. AR in the provisional trading account made by him. Therefore, after discussion with Ld. AR and AO, it has been decided that the amount of excess stock found during the course of survey operation should be reworked after making another trading account by taking sale figure at Rs. 67,58,352/- and purchase figure at Rs. 71,79,376/-.. 5.6 Regarding excess cash of Rs. 2,14,000/-, after examining the statement of Shri Neeraj Kumar Maheshwari, partner of the appellant firm, it has been found that this amount was finally surrendered in the hand of the firm stating in the statement that this amount is his unaccounted income which is in addition to regular income of the firm. The relevant portion of the statement of Shri Neeraj Kumar Maheshwary is given as under:- Further, from the answer to question no.23 in ....
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....impounded documents, the provisional trading account of the appellant is made as under:- Trading account Opening stock 15,80,465/- Sales 67,58,352/- Purchase 71,79,376/- Closing stock 28,91,455/- Freight 2,52,654/- G.P. (9.43% of sale) 6,37,312/- 96,49,807/- 96,49,807/- 6.2 As per the above trading account, the stock of the appellant is coming to Rs. 28,91,455/- as against the stock of Rs. 37,25,100/- found during the course of survey operation. Therefore, the excess stock would come to Rs. 8,33,645/- 37,25,100 - 28,91,455). As against this excess stock, the appellant has shown that he has already declared the excess stock of Rs. 6,64,850/- as his additional income in the Profit & Loss account and hence the figure of excess' stock declared by the appellant was found short by Rs*1,68,795/- {Rs.8,33,645 - Rs. 6,64,850/-) and therefore, the AO is directed to add Rs. 1,68,795/- in the income of the appellant u/s. 69 on account of the figure of excess stock as computed above and not disclosed by the appellant in the return of income. Therefore, the addition of Rs. ....
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....t found to be correct. I have already discussed in para No. 5.5 that the sale and purchase figures were worked out on the basis of the impounded document in the presence of the AO on 28.06.2011 and it has been found that sale and purchase figures shown in the provisional trading account made by the survey party was not correctly worked out and the AO also could not justify the figures of sale and purchase shown in the provisional trading account. Therefore, in my opinion, the Ld. AR was able to rebut the confession made by the appellant during the course of survey operation on the basis of impounded document and such rebuttal cannot be brushed aside only on the basis of a statement recorded during the survey operation which was based on a provisional trading account, the correctness of which could not be established by the AO with any supporting evidence. Therefore, in my considered opinion, no addition on the basis of confessional statement can be sustained unless such confession is supported by some documentary evidence and this view has been clearly emphasized by the CBDT in its Instruction No.286/2/2003-IT(lnv.) in which it has been stated as under:- "Instance....
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....refore, no interference is called for in the matter and for part addition maintained by the ld. CIT(A), the assessee did not challenge the cross objection. He has submitted that the statement given at the time of survey is not conclusive and it is open to the assessee to establish that the same was not true and correct by filing the cogent evidence. In support of his contention, he has relied upon the decision of Madras High court in the case of CIT vs. S. Khader Khan Son, 300 ITR 157 and also submitted that the said decision has been confirmed by the Hon'ble Supreme Court recently. He has also relied upon several decisions in support of the same contention. The copies of the same are filed in the paper book and also relied upon the decision of Hon'ble High Court of Chhattisgarh in the case of ITO vs. Vijay Kumar Kesar, 327 ITR 497. He has also cited some other decisions of the Tribunal, copies of which are filed in the paper book on the proposition that addition was merely made on the basis of statement recorded during the course of survey without bringing any corroborative evidence and the addition cannot be sustained. 4. We have considered the rival submissions and do not ....