2015 (10) TMI 528

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....ord are that the assessee is a partnership firm engaged in the business of manufacturing and trading of bristles and brushes. Return of income was filed on 31.10.2006 showing Nil income and the same was processed under section 143(1) of the Act. A survey was conducted on 23.10.2007 at the premises of the assessee wherefrom books of account and loose papers were impounded. During the course of survey, it was found that assessee has a large list of creditors, from whom purchase of raw bristles were made. During the course of survey, statement of Shri. Pawan Sood, partner of the assesseefirm was recorded wherein he surrendered certain amounts which included the amounts standing as credits in three sundry creditors. Thereafter assessee filed a ....

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.... hereunder for the sake of reference:- "6.1 On perusal of the statement of the partner recorded during the course of survey, I find that one of the partners of the appellant had surrendered a sum of Rs. 45,75,95/- on account of credit balances standing in the names of three sundry creditors. Having gone, through the entire statement (supra), case records, assessment order and also the penalty order, it is not at all ascertainable as to what incriminating material had been found (during the course of survey) on which these credit balances had been surrendered by the appellant. The only piece of evidence is the statement recorded (supra). Apparently no adverse/incriminating material was found by the department during the course of the surv....

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....rtment with open heart. In case after trying on his best or her part to escape the liability, disclosure is made, it may not be treated as voluntary disclosure to escape the penalty u/s 271(1)(c) of the Act." 6.2.1 Similarly, the Gujarat High Court in the case of CIT V/s. Satyanarain Sikar [238 ITR 855 (FB)] makes the position very clear that when in pursuance to search, incriminating material is found and disclosure is made, that disclosure is liable to be void and not voluntary, but if no incriminating material is found and still disclosure is made, then it will be treated as voluntary. 6.2.2 Further, in the case of CIT v/s Punjab Tyres [(1986) 16,2 ITR 517 (MP)], it was held by the Hon'ble M.P. High Court that: ".....Having ....

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....reasons for such admission or declaration some of which are present in this case as noted earlier. The natural consequence is that mere fact of agreed addition does not result into a conclusion that the amount agreed to be added as income is concealed income. In our view, even though it may be repetition, in such a case, the assessing officer should further bring some material on record so that it is conclusively established that such surrender, in fact, represented the real income or undisclosed income of the assessee" 3.2.4 In the instant case, as I have pointed out in earlier paragraphs, the assessee has fully cooperated with the department and had made the voluntary disclosure at the very first instance when a normal query was ed by ....

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....er contended that surrender was made during the course of survey itself. Therefore, it is a voluntary surrender and it cannot be called that the surrender was made when the assessee was cornered by the queries raised by the Assessing Officer. 6. We have heard the arguments advanced by the ld. counsel of the respective parties and carefully perused the orders of the authorities below and the documents placed on record, judgments referred to by the parties. It is evident from the record that surrender was made during the course of survey by the assessee and furnished the return of income declaring additional income and paid the tax thereon. Nothing has been brought out on record by the Assessing Officer that the surrender was made when the....