TaxTMI 
TaxTMI 
2015 (3) TMI 750
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....e by the Assessing Officer in the returned income is correct. 3. That the learned Commissioner of Income-tax (Appeals) has erred in holding that surrender made by the assessee in the statement dated February 11, 2009, was not wrong is without considering the fact that circumstantial evidence and other material on records clearly establish that surrender made by the assessee was not voluntarily. 4. That the learned Commissioner of Income-tax (Appeals) has failed to consider that the representation and communication to the concerned Additional Commissioner of Income-tax, Range Khanna and the worthy Commissioner of Income-tax, Ludhiana, by the assessee immediately has not been considered properly. 5. That the learned Commissioner of Income-tax (Appeals) has erred to consider that the learned Assessing Officer has failed to establish by bringing on record any evidence that addition of Rs. 5,00,000 and Rs. 69,00,000 was warranted and called for. 6. That....
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....e assessee to prove that surrender made in the statement was wrong. This report was given to the assessee who in turn sought to get certain additional evidence admitted in the form of a certificate from Sarpanch and affidavits of some individuals through which the assessee wanted to prove that names from which the alleged receivables were there which were not recorded in the books of account, in fact did not exist. This additional evidence was also forwarded to the Assessing Officer by the learned Commissioner of Income-tax (Appeals) who reported back that the assessee was given 19 hearings and therefore the assessee cannot say that he was prevented for producing such additional evidence on the basis of such evidence can be admitted. 5. The learned Commissioner of Income-tax (Appeals) in this background refused to admit the additional evidence. Thereafter he adjudicated the issue on merits and mainly observed that the admission was proper evidence and a proper statement has been recorded which could not be proved by the assessee to be wrong and therefore assessment was justified. 6. Before us, learned counsel for the assessee narrated the facts and submitted that nothing incr....
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....eturn regularly and no substantial addition has been made even when the assessment were taken up in the scrutiny which clearly show that the assessee is a law abiding citizen. 8. On the other hand, the learned Departmental representative for the Revenue supported the order of the Assessing Officer and the learned Commissioner of Income-tax (Appeals). 9. We have gone through the rival submissions carefully. Admittedly survey was conducted on February 11, 2009 and the statement record during survey on February 11, 2009, reads as under : February 11, 2009 "To, The Additional Commissioner of Income-tax Range-Khanna, Khanna Subject : Survey under section 133A of the Income-tax Act . . . after for surrender of additional income : request regarding Sir, Survey operation under section 133A of the Income-tax Act, 1961, has been conducted by the survey party of the Income-tax Depart ment consisting of following officers and officials : 1. Sh. Gurmeet Singh Sohal, Income-tax Officer. 2. Sh. Jasbir S. Saini, Income-tax Officer. 3. Sh. R.S. Dhami, Inspector. 4. Smt. Harjit Kaur, Inspector. at our business premises, i.e., M/s. Dr. Sheru Rice and Gener....
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....ubmitted voluntarily. The applicant was intimidated by the officers of the Department to prepare forged papers wherein imaginary and non-existent names were mentioned as debtors (receivable) for a total value of Rs. 69,00,000 (Rs. sixty-nine lakh only). Even the cash in hand figures were increased by Rs. five lakhs just to get surrender of Rs. 75,00,000 for the sake of name and fame of the Department and to put fear pychosis in the minds of the general public. The survey at the business premises of the firm started at about 11.30 a.m. on February 11, 2009, when the survey party of your Department took full control of all the account books and the cash available. Some staff members of your Department started counting the stock. When the survey operation was going on the officers have been threatening and intimidating me to pay at least Rs. 70,00,000 Rs. seventy lakh of Income-tax or face the wrath of the Department. With each passing minute the officers have been threatening me of dire consequences if the surrender is not made. Survey which started at 11.30 a.m. on February 11, 2009, was supposed to stop at the sunset but no one it continued for the whole night. Nothing incrimina....
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....r aforementioned letter and called for a factual report from the concerned officer with reference to the various allegations listed by you therein. You are requested to be present in this office on February 24, 2009, at 11.30 a.m. for a discussion in this regard, so as to appre ciate your version more clearly. You may also bring your counsel with you for this purpose. Yours faithfully, Sd/- (D. S. Brar) Additional Commissioner of Income-tax, Range Khanna." It seems no enquiry has been conducted and the Department has not been able to produce any records or evidences to show whether any enquiry was conducted. The assessee in the absence of any enquiry approached the office of the CIT-II, Ludhiana and wrote following letter on February 24, 2009 : February 24, 2009 "To, The Commissioner of Income-tax Ludhiana-II Ludhiana Sub: Inquiry regarding survey operation at the premises of Dr.Sheru Rice and Gen Mills. Vill : Iraq (Machhiwara) Sir, Apropos the subject cited above it is humbly submitted that survey under section 133A was conducted at the premises of the firm on February 11, 2009, in which no incriminating document was found. The Additional Co....
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.... matter. In such circumstances the assessee could do nothing but we must appreciate the assessee who was brave enough to write these letters. 11. Now the question is what is the evidentiary value of statement recorded in the survey. Identical issue came up for consideration of the hon'ble Madras High Court in case of CIT v. S. Khader Khan Son [2008] 300 ITR 157 (Mad). In that case the assessee had filed return declaring income of Rs. 12,640 for the assessment year 2001-02. On July 4, 2001 a survey was conducted in the premises of the assessee and through his sworn statement one of the partner of the firm namely Shri Asif Khan offered additional income of Rs. 20 lakhs for the assessment year 2001-02 and Rs. 30 lakhs for the assessment year 2002-03. On August 3, 2001 the statement was retracted stating that Asif Khan was new to the management and he could not answer the enquiries made and as such agreed to addition which could not be possible because of low profit in the business because of severe competition. In that case the books of account were not produced and therefore addition of Rs. 20 lakhs was made on the basis of a statement recorded during the survey. The hon'b....
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....rations. 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 is, therefore advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income-tax Department. Similarly, while recording statement during the course of search and seizure and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, the Assessing Officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders." The court also concluded that total analysis under paragraph 14 which is as under : "From the foregoing discussion, the following principles can be culled out : (i) An admission is an extremely important piece ....
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....TR 480 (SC) wherein it was recorded as under : "This civil appeal filed by the Department pertains to the assessment year 200102. In view of the concurrence finding of fact this civil appeal is dismissed. Therefore, the order of the hon'ble High Court gets emerged with the order of the hon'ble Supreme Court and in turn becomes law of the land under article 141 of the Constitution of India." 13. We fail to understand that once the assessee has retracted from surrender within seven days and has in fact complained against high headedness of the survey team led by the Additional Commissioner of Income-tax, what prevented the Department from making any enquiries in respect of the persons from whom so called receivables were there which had not been recorded in the books of account. As held by the hon'ble Supreme Court in case of Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 (SC) that admission is important piece of evidence but the person making admission can show that such admission is not correct. Once this was done by the assessee, the onus was on the Revenu....