TaxTMI 
TaxTMI 
2013 (10) TMI 478
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....n 06.10.2006 without any corroborative evidence and the same was unjust, unlawful and has been wrongly upheld. 4. That in view of the facts & circumstances of the case, the addition was made illegally in violation of the CBDT Instructions F.No.286/2/2003 dated 10.30.2003 and the same has been wrongly upheld. 5. That the alleged surrender was retracted and the evidence filed in respect thereof has been wrongly ignored. 6. That in any case the surrender was not supported by any evidence on record that the cost of construction was duly appearing in books of account and the cost of complete building was proved by books of account and supported by valuation certificate. 7. That the evidence placed on record, explanations filed have not been properly considered and judicially interpreted and the addition has been wrongly upheld. That in any case, the affidavit filed by the appellant admitted on record and not contradicted by the department or proved to be false by the department was conclusive evidence and the same has been wrongly ignored. 8. That in any case the addition of Rs.20,00,000/- was not justified by any evidence or material on record and that addition was unjus....
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.... "I have been instructed by my client to make the following submissions: 1. That a survey operation was carried out at the business premises of the assessee on 06.10.2006 during which statement of Sh.Rishi Arora, partner of the firm was recoded u/s 133A. In the statement recorded, the assessee initially surrendered a total amount of Rs.53 lakhs comprising of Rs.35 lakhs in the account of building, Rs.15 lakhs in cash and Rs.3 lakhs on account of shortage of stock. 2. That the assessee had made the above surrender without knowledge of the relevant facts since he was an immature person without adequate knowledge o the books of account, proceedings of the Department & under mental tension and trauma. The surrender on account of renovation of building during the survey was made without any defects or other discrepancies in the books of account or other material which would reflect any unexplained investment in construction of building. 3. After the survey, the assessee realized the discrepancies found and that it was baseless. The assessee, therefore, filed a grievance petition before the then JCTI Sh.R.L.Chhanalia. 4. That vide letter No.8817 dated 20.11.2006, the JCIT acc....
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....ted 10/3/2003 wherein obtaining uncorroborated confessions has been discouraged. In the facts and circumstances of the case, it is clear that the surrender of Rs. 8 lakhs for the assessment year 2007-08 by the assessee and nil for the year under consideration had assumed finality after discussion with the JCIT, Pathankot and may kindly be accepted." 3. The Assessing Officer considered the submissions of the assessee and finally confirmed the addition of Rs.20 lakhs under section 69B of the Act. The relevant portion of AO's order at pages 6 & 7 is reproduced as under for the sake of convenience: "A perusal of the survey folder shows the following facts: 1. An inventory of cash has been prepared on the date of survey duly signed by Sh. Rishi Arora showing cash found and received back by the assessee of Rs.14,38,310/-. Even denomination of the cash found is clearly mentioned. 2. Itemwise inventory of stock found during survey has been prepared which has been duly signed by Sh. Rishi Arora and Sh. Subhash Chander Arora. 3. From computerized books of account of the assessee, printout of closing balance as per cash book has been taken which is duly signed by Sh.Rishi Ar....
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....tner of M/s. P.P. Arora and Associates, Chartered Accountant. This shows that their chartered accountant was present at the time of survey and the department could not have exercised undue influence. 4. The assessee deposited tax of Rs.6,73,200 on 06.11.2008 for the A.Y. 2006-07. The same was communicated to this office vide letter dated 07.11.2008. In the letter it is clearly mentioned that the tax has been deposited on account of surrender as agreed by Sh. Rishi Arora. The deposition of this tax shows that the surrender was voluntary and that the assessee had not retracted from his surrender till this date. 5. In view of the above facts, filing a letter suo-moto reducing the surrender to Rs. 8 lakhs appears to be an after thought to escape the tax liability. There is no acceptance by the department of the revised surrender. In view of the above discussion, it is established that the assessee had made undisclosed investment in construction of its shop building of Rs.20,00,000/-.Hence, you are directed u/s 144A of the Act to make an addition of Rs.20,00,000/- u/s 69B of the I.t.Act. In view of the facts of the case and above directions u/s 144A of the Act, it is establi....
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.... on 22.11.2006 with the JCIT, the surrender was reduced to Rs. 8 lakhs for the impugned year and the assessee was asked to file a revised surrender letter which was filed on 27.11.2006 and which is available at PB-62. No further communication was received from the Income Tax Department and it was adduced that the Department needed no further information and amicably in view of the actual facts of the case surrender was validly accepted by the Department. A sum of Rs.8 lakhs was duly credited in the books of account of the assessee and taxes paid thereon. She argued that no incriminating material has been found during the course of survey. As argued earlier, the surrender has been retracted for the reasons that the assessee had made the surrender without the knowledge of the relevant facts and adequate knowledge of the books of account, which was under mental tension and trauma, who immediately realizing that there is no defect in the actual investment made and amount disclosed in the books of account made a petition to the department after discussing the facts of surrender earlier made and accordingly revised surrender, which is a fact on record, as argued earlier. She argued that ....
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....relied on the decision of Hon'ble Supreme Court in the case of C.I.T. vs. S. Khader Khan Son. Reported in (2012) 25 Taxman.com.413(SC), in which the Revenue's appeal was dismissed and it was held by the Hon'ble Supreme Court that section 133A does not empower any ITO to examine any person on oath; so statement recorded u/s 133A has no evidentiary value and any admission made during such statement cannot be made basis of addition. The decision was made in favour of the assessee. In the said decision, Circular of the Central Board of Direct Taxes dated March 10,2003 has been has been quoted at page 165 and 166 which has been read by Ms. Ananya Kapoor and which for the sake of convenience is reproduced as under:- "Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search and seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, on confessions during the course of search and seizure and survey operations do not serve any useful purpose. It i....
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....ter discussion with the JCIT, Pathankot, no defect has been pointed out in the books of account by the A.O. and therefore, the department has accepted the books of account. Since the same has not been accepted, the department cannot blow hot and cold in the same breath i.e. on one hand the department is accepting the books of account of the assessee and on the other hand making an addition without bringing any incriminating document on record of Rs.20 lakhs only on the basis of statement given at the time of survey, which has been retracted, as argued hereinabove. She prayed to allow all the grounds of the assessee. 6. The Ld. JCIT(DR), Mr. Mahavir Singh, on the other hand, relied upon the orders of both the authorities below and argued that letter dated 06.10.2006 given on the date of survey was given in full conscious. The wording of the statement can be made only by consulting and taking help of the counsel. The wording of the statement is such that the assessee cannot be understood or treated as immature person who has taken a conscious decision. He relied upon the decision of Hon'ble Supreme Court in the case of Surjeet Singh Chhabra vs. Union of India & Ors, dated 20.10.19....
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....has claimed that they have been forced to confess the undisclosed income during the course of the search and seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessee while filing returns of income. In these circumstances, on confessions during the course of search and seizure and survey operations do not serve any useful purpose. It was, therefore, advised by the C.B.D.T. that there should be focus to information on what has not been disclosed or is not likely to be disclosed before the Income-tax Department. It was also mentioned in the said Circular dated March 10, 2003 that the A.O. should rely upon the evidences/materials gathered during the course of search/survey operations. In this regard, in the present case, the assessee has submitted that the assessee was under mental tension and trauma and the surrender was made on the date of survey was without the knowledge of the relevant facts. There is no incriminating documents found during the course of survey or during the assessment proceedings. Nothing has been brought adverse on record which may to lead to information and which could prove that the asse....