TaxTMI 
TaxTMI 
2016 (1) TMI 802
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....y by Ld CIT(A) -8,54,574/- 3. The revenue is aggrieved by the decision of Ld CIT(A) in deleting the income surrendered by the assessee in the statement given u/s 132(4) of the Act in both the years. 4. The facts relating to the case are set out in brief. The assessee company is engaged in the business of manufacturing, processing and trading of gold and diamond jewellery, silver articles, wrist watches and is carrying on its business from its showroom situated at New Delhi. The revenue carried out search and seizure operations u/s 132 of the Act in the hands of the assessee, its directors, group concerns and related persons on 18-09-2009. Consequent to the search operations, the assessments of the assessment years under consideration were completed u/s 143(3) r.w.s. 153A of the Act. 5. We shall first take up the appeals filed by the revenue, since the issues urged therein arise out of common set of facts. The revenue is aggrieved by the decision of Ld CIT(A) in deleting the addition of Rs. 2.00 crores and Rs. 4.00 crores made by the assessing officer in AY 2009-10 and 2010-11 respectively. The facts relating to the same are stated in brief. The search conducte....
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....,22,689/- and for A.Y. 2010-11 declaring a total income of Rs. 4,45,18,640/-, which did not include the amounts offered in the statement given u/s 132(4) of the Act. 7. Hence the assessing officer called for explanations from the assessee as to why the income of Rs. 6.00 crores surrendered in the statement given u/s 132(4) of the Act was not offered to tax. The assessee, vide its letter dated 28.11.2011, offered following explanations:- "51. With respect to your Query at Sl. No.51 regarding the disclosure of Rs. 6.00 crores during the course of search operation on the basis of statement recorded on oath Shri Nandkishore Zaveri during the course of search operations and in connection therewith, it is submitted that as the raid continued for more than 72 hours at a stretch. At the fag end of the raid tremendous undue psychological pressure was built up to declare some amount to buy peace and more particularly to avoid harsh and uncalled for / untoward consequences and that any failure to comply to such indirect subtle suggestion would make him liable to face dire consequences under the various provisions of Law. Moreover, he was given the impression that they had immense ....
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.... day of search. Since the offer for surrender of additional income was made on the third day, it cannot be said that the offer was made under mental pressure or given under duress. The AO also observed that the search officials did not proceed further, only because the assessee agreed to surrender its undisclosed income. If the director had not surrendered the income, the search officials would have continued the search and could have investigated entire matter on the basis of various facts & circumstances during the course of search itself. In this regard, the AO placed reliance on the decision rendered by the Mumbai bench of ITAT in the case of Hiralal Maganlal & Co. Vs. DCIT (2005)(96 ITD 113), wherein it was held that "having made a voluntary declaration on oath and induced the departmental authorities to act upon the same at the time of search, the assessee could not be permitted to turn around later and deny the truth of the aforesaid declarations or the representations made therein." 8. The assessing officer accordingly took the view that there is no nexus between the additional income of Rs. 6.00 crores offered by the assessee and the excess stock of diamonds fo....
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....s, the assessee has cleverly prevented the search officials to proceed further. Hence, the assessee is not entitled to retract from the statement given by him as held by the Mumbai bench of Tribunal in the case of Hiralal Maganlal (supra). Even if the assessee wishes to retract from the statement given by him, the retraction should be corroborated with some credible material. He further submitted that the Hon'ble Punjab and Haryana High Court has held in the case of Bachittar Singh Vs. CIT (2010)(328 ITR 500) that the statement given during the course of survey operations conducted u/s 133A, even though does not have evidentiary value, cannot be held to irrelevant. He submitted that the Hon'ble Supreme Court in the case of Padmausundara Rao (Dead) & Ors Vs. State of T.N & Ors (Appeal (Civil) 2226 of 1997 dated 13-03-2002) has held that the Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. It was further held that the Courts cannot read anything into a statutory provision which is plain and unambiguous. Accordingly he submitted that the provisions of sec. 132(4....
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....e was put a lot of pressure or undue influence could be inferred from the conduct of the search officials. He submitted that the recording of sworn statement commenced on the date of commencement of search on 18.09.2009 and on that date 24 questions were posed to the assessee. It was discontinued on 18.09.2009 and again commenced on 19-09-2009 and on that date six questions were posed. It was discontinued at 11.30 p.m on 19-09-2009 and again commenced on 20-09-2009 at 02.30 p.m. Thirteen questions were posed to the assessee on that date. In the sworn statement, it was not stated that the recording of sworn statement was discontinued on 20-09-2009. Further, sworn statement would show that Q.No.42 was put to the assessee on 20th September, 2009 and the next question, i.e., Q.No.43 was asked on 21st September, 2009, meaning thereby, the search officials were putting pressure upon the assessee without break since 20-09-2009 and continued with recording sworn statement on 21.09.2009. These conduct would show that the search officials did not intend to conclude the search until the additional income was offered by the assessee. Hence, the assessee was forced to offer additional income of....
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....he Ld A.R submitted that the list of inventory taken by the search officials were later scrutinized and it was found that there were glaring mistakes in the computation of weight as well as value of physical stock. Accordingly, the alleged difference between the physical stock and book stock was duly reconciled and submitted to the assessing officer. It is pertinent to note that the assessing officer has accepted the reconciliation statement and hence he did not make any addition towards alleged excess stock. Hence the assessing officer has proceeded to take the view that the additional officer of Rs. 6.00 crores is independent of the alleged excess stock and accordingly made the addition. 16. The Ld A.R further submitted that income under the Income tax Act is not computed on the basis of admission alone, but as per the provisions of the Act. He also submitted that the proceeding u/s 132 are quite different from the normal assessments framed u/s 143 (3). Though there is admission during the course of search in the statement recorded u/s 132(4), yet the Assessee can demonstrate that statement was incorrect by leading to cogent evidence and demonstrating that the admission was in....
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....the alleged excess stock of diamonds, but according to the assessing officer, the surrender of Rs. 6.00 crores was independent of excess stock found during the course of search. 19. We shall examine the claim of both the parties on this issue first. The Ld A.R has explained the sequence in which the sworn statement u/s 132(4) of the Act was recorded, i.e., it was recorded piece meal by duly noting as to when the recording of statement was commenced and when it was discontinued. As pointed out by the Ld A.R, the question No.42 was posed to the assessee on 20-09-2009 and without discontinuing the recording of statement, the question no.43 was posed on 21.09.2009 in the early morning by about 3.00 a.m. This peculiar fact gives ample scope to infer that the assessee was put pressure to surrender additional income. This inference is further fortified by the fact that the search was concluded immediately after the surrender of Rs. 6.00 crores. It is also pertinent to note that the recording of sworn statement commenced on 18-09-2009 and continued upto 21.09.2009, i.e., the search officials were posing questions to the assessee for almost four days. Hence, in our view, it is not correc....
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....claration was made. It is well settled proposition that the strict rules of Evidence are not attracted in relation to income tax proceedings and further there is nothing like res judicata or estoppel. In order to tax any income under the Income Tax Act, it is required to be shown that such income has accrued to the assessee or is deemed to have accrued. Income is not earned in air or vacuum. The income presupposes receipt or movement of funds, which are revenue in nature. It is settled law that normally, the onus is upon the revenue to show that any income has accrued to the assessee, particularly when the assessee is disputing the claim of the revenue. In this regard, a gainful reference may be made to the decision rendered in the case of Janki Ram Bahadur Ram v. CIT (57 ITR 21 SC). In the instant case, the assessing officer is harping upon the admission made in the sworn statement. He has also alleged that the assessee has stopped the search officials to proceed further during the course of search proceedings. We are unable to agree with the said view of the AO simply for the reason that the search has taken place for almost four days and the entire business premises were under t....
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....r section 132(4) of the Act. Despite the fact that the said statement was later on retracted no evidence has been led by the Revenue authority. We are, therefore, of the view that merely on the basis of admission the assessee could not have been subjected to such additions unless and until, some corroborative evidence is found in support of such admission. We are also of the view that from the statement recorded at such odd hours cannot be considered to be a voluntary statement, if it is subsequently retracted and necessary evidence is led contrary to such admission. Hence there is no reason not to disbelieve the retraction made by the Assessing Officer and explanation duly supported by the evidence. We are, therefore, of the view that the Tribunal was not justified in making addition of Rs. 6 lakhs on the basis of statement recorded by the Assessing Officer under section 132(4) of the Act. The Tribunal has committed an error in ignoring the retraction made by the assessee." (emphasis supplied.) In the instant case also the search was concluded at 3.30 am on 21.09.2009, while it was commenced on 18-09-2009 at 8.30 a.m. As stated earlier, the Question no.42 was posed on 20-09-200....
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....hered during the course of search/survey operations or thereafter while framing the relevant assessment orders. Instruction : F. No. 286/2/2003-IT (Inv. II), dated 10-3-2003. The assessing officer's stand that the surrender of Rs. 6.00 crores was voluntary and independent of alleged excess stock is in contradiction to the instruction issued by the CBDT. 24. Before us, the Ld A.R also placed reliance on the decision rendered by Hon'ble Supreme Court in the case of CIT vs. V. MR.P Firm (1965) 56 ITR 67, wherein it was held that the principle of estoppels will not against the Income tax Act. The relevant observations are extracted below: "The contention is that the assessees having opted to accept the scheme, derived benefit there-under, and agreed to have their discharged debts excluded from the assets side in the balance-sheet subject to the condition that subsequent recoveries by them would be taxable income, they are now precluded, on the principle of "approbate and reprobate", from pleading that the income they derived subsequently by realization of the revived debts is not taxable income. The doctrine of "approbate and reprobate" is only a species of esto....
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....f v. ITO [1970] 77 ITR 237 (Ker.), CIT v. Bharat General Reinsurance Co. Ltd. [1971] 81 ITR 303 (Delhi), CIT v. Archana R. Dhanwatey [1982] 136 ITR 355 (Bom.). 32. If particular levy is not permitted under the Act, tax cannot be levied applying the doctrine of estoppel. (See Dy. CST v. Sreeni Printers [1987] 67 SCC 279. 33. This Court in the case of Nirmala L. Mehta v. A. Balasubramaniam, CIT [2004] 269 ITR 1 has held that there cannot be any estoppel against the statute. Article 265 of the Constitution of India in unmistakable terms provides that no tax shall be levied or collected except by authority of law. Acquiescence cannot take away from a party the relief that he is entitled to where the tax is levied or collected without authority of law. In the case on hand, it was obligatory on the part of the Assessing Officer to apply his mind to the facts disclosed in the return and assess the assessee keeping in mind the law holding the field." The Hon'ble Calcutta High court in case of CIT V. Bhaskar Mitter (73 Taxmann 437 has held as under: "8. The controversy raised in the second question is as to whether the annual letting value of the property deter....
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.... rebutted the admission made by it, which was under pressure and mistaken belief. 28. Now we shall examine the facts available on the case laws relied upon by Ld D.R. In the case of Hukum chand Jain (supra), the assessee therein failed to discharge the onus of proving that concession made by him u/s 132(4) was as a result of intimidation, duress or coercion or that same was made as a result of mistaken belief or law. However, in the instant case, we have already held that the conduct of the proceedings shows that the search team has put up pressure upon the assessee and further the assessee was under mistaken belief that there was actually excess stock. Hence the assessee has agreed to surrender Rs. 6.00 crores under the mistaken belief that there was alleged excess stock. In the case of Bachittar Singh (supra), the revenue carried out a survey operation u/s 133A of the Act and the addition was made on the basis of statement recorded during the course of survey proceedings. The assessee contended that the statement taken during the course of survey does not have evidentiary value. However, a careful perusal of the facts available in the above said case would show that the assess....
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....orresponds the items dealt in by the assessee. Further the abbreviation "YKZ" tallied with the name of another director named "Yashovardan Kishore Zaveri". Accordingly, the assessing officer assessed the aggregate amount of three items mentioned above, viz., Rs. 62,21,950/- as unexplained investment in the hands of the assessee. In the appellate proceedings, the assessee stood by its contentions that the pocket diary did not belong to it. However, the Ld CIT(A) was not convinced with the said contentions, since the provisions of sec. 132(4A) places presumption against the assessee. Accordingly he confirmed the assessment of Rs. 62,21,950/-, referred above. 33. Before us, the Ld A.R vehemently argued that the pocket diary was a dumb document and hence the same cannot be relied upon. He submitted that the director of the assessee was questioned about the entry relating to Rs. 30.00 lakhs only and no question was asked about other entries. He further submitted that the assessee was not aware of any person by name "Naresh Gupta" and the assessing officer has also not taken any steps to locate or make enquiries with Naresh Gupta. Further, Shri Yashovardan Kishore Zaver", whose name i....
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.... the presumption and further since the assessing officer has failed to substantiate the addition as unexplained investment, in our view, this issue could be resolved only via media. We have noticed that the transactions noted down in the diary could possibly be in the nature of trade transactions. In that case, it may be possible to infer that the assessee might not have accounted these transactions in the books of account. Under these set of facts, in our view, the possible view could be that the assessee might have also sold the gold jewellery noted down in the pocket diary without recording the same in the books of account. Though there is no supporting evidence in support of the above said inference, in the absence of proper explanations from the assessee and also in the absence of proper case being made out by the AO, we have no other option but to proceed on the inference cited above. In this back ground, in our view, this issue could be resolved by estimating the gross profit that would have been earned on sale of the above said jewelleries. The assessee has furnished details of sales and gross profit ratio in page 34 of the paper book. We notice that the assessee has declar....
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....e assessee had stated that the jewelleries belonging to the assessee were not kept with outsiders and similarly the jewelleries belonging to others were not available with him. Hence the assessing officer held that the shortage in the stock of jewellerry (95365.600 less 93051.300) is to be treated as unaccounted sales and accordingly assessed a sum of Rs. 31,77,094/- as income of the assessee. 40. In the appellate proceedings, the Ld CIT(A) partially accepted the reconciliation statement filed by the assessee, i.e., he accepted that the search team did not consider the old gold, broken pieces, standard gold bars and items receivable from karigars aggregating to 5251.100 grams. By including the same, the physical stock worked out to 98302.400 grams. However, the Ld CIT(A) did not accept the claim of the assessee that it had received 2261.150 grams on sale or return basis from suppliers. Accordingly, the Ld CIT(A) held that the physical stock should be taken at 98,302.400 and the difference between the above said physical stock and book stock of 95365.600 should be assessed as income of the assessee as unexplained investment u/s 69A of the Act. It is pertinent to note that the Ld ....
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....ase bills subsequently raised by them. We notice that the tax authorities has discarded these evidences as self serving documents on the reasoning that (a) the delivery challans were not found at the time of search and (b) the director of the assessee did not state these facts in the sworn statement. 43. We notice that the tax authorities did not opt to examine the suppliers before rejecting the evidences furnished by the assessee. A careful perusal of the sworn statement would show that the director of the assessee was not aware of minute details that were asked by the search team and whenever such kind of questions were posed, he has replied that he needs to consult his accountant. Hence, in our view, it may not be correct to place full reliance on the statement given by the director to the effect that the gold stock belonging to others were not available with the assessee. We notice that the director had also stated that the gold stock belonging to the assessee were not kept with others. However, the Ld CIT(A) has accepted that the gold stock belonging to the assessee was available with the karigars, which is in contradiction to the stand taken by him when the assessee submit....