TaxTMI 
TaxTMI 
2016 (5) TMI 93
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....assessee was in the business of purchase and sale of gold, silver and diamond jewellery besides doing labour job work of making jewellery out of gold and new jewellery. A survey operation under section 133A(1) of the Act was conducted at the business premises of the assessee on June 23, 2009. During the course of the survey operation inventories of cash, stock and the list of cheque books/pay in slips, etc., found at the business premises of the assessee were prepared. Certain incriminating documents were found, which were impounded. The statement of Sh. Vipin Aggarwal, the proprietor of the business, was recorded. From the impounded documents, the Assessing Officer noted that a letter was written by the assessee to Pearl India, New Delhi, regarding cessation of liability worth Rs. 90 lakhs which was being shown as standing by the assessee in his return. As a result of the survey operation, the assessee offered an additional income of Rs. 2.25 cores over and above his regular business income for the assessment year 2009-10 and the assessment year 2010-11 on account of discrepancy in stock and cash payment out of books and admission with respect to cessation of liability of Rs. 90 l....
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....g as on the date of survey and the actual payment thereof has duly been made at a later date by account payee cheques. Further, the actual amount outstanding to the said concern was Rs. 1,35,10,686.18. Question During the course of survey, the document as referred to above was found from your business premises, and I am showing you the same, which was duly signed by you during the course of survey operations. If the same has not been written by you, as stated by you in the earlier reply, please intimate as to whom the said paper belongs to. Answer I do not know as to whom does it belongs to and how I have signed it. Sd/- (Vipin Aggarwal) The statement given by me as above is at my own and without any duress pressure. Further, certified that the particulars recorded/given as above are correct and true to the best of my knowledge and nothing has been concealed therein. Sd/- (Vipin Aggarwal)." (ii) The statement of the assessee was not accepted by the Assessing Officer and noted that the assessee retracted from his statement while filing the return of income from the year under consideration which was filed on Sep....
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....count of unexplained investment under section 69 of the Act. 4. During the course of the appellate proceedings, the counsel for the assessee filed a written submission which in brief, is reproduced as under : "The brief facts of the case are that the survey under section 133A(1) at the business premises of the appellant was conducted on June 23, 2009, which relate to the assessment year 2010-11 and the additional income of Rs. 1,35,00,000 was got declared relevant to the assessment year 2010-11. But after the conclusion of survey, the survey officer in charge discussed the same with his senior boss about survey on phone and on further instructions he directed the appellant that this additional income has to be revised at higher figure but by that time all the calculations in respect of stock and cash had already been made and there was no way out to increase the additional income. A strategy was chalked out to have additional surrender of Rs. 90 lakhs to which the assessee had shown great reluctance. It was already 3 a.m. of the next morning and the appellant was totally exhausted and depressed. To increase the surrender amount, a false piece of evidence was created to ....
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...., the attention is drawn to the fact that this is totally contrary with the books of account, secondly, had this letter been sent to the addressee, carbon copy should have been from part of our record and not the original and for such an important communication, it could have been sent by registered post/courier and receipt thereof should have been stitched with this letter. No such evidence was available, more so this was original letter said to have been written on March 23, 2009, then why the original letter was lying in our record, no word o/c (office copy) was written on this letter, no receipt of having been sent this letter is on record, no proper address of this firm in Delhi has been written on the letter. The date on signatures had been interpolated and got repeated the same clearly reflects that this letter was engineered to enhance the survey and as such this is contrary to the spirit of section 133A of the Income-tax Act and the Board's circular on the subject. The facts mentioned in this letter are oral and do not tally with the books of account and as such the statement recorded during the course of survey about this letter was also involuntary and inaccurate obt....
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.... dated January 17, 2013, was received with copies of statement of account of the assessee enclosed as on March 31, 2009, and March 31, 2010. The statement of account showed opening and closing balances as on March 31, 2009, and March 31, 2010. Thereafter, a summon under section 131 of the Act, dated March 15, 2013, was issued to Pearl India Ltd., New Delhi, requiring the ledger for the assessment years 2009-10 and 2010-11 and the audited balance-sheet for the assessment years 2009-10 and 2010-11. In response to the notice under section 131 of the Act, PACL Ltd. replied and enclosed the audited balance-sheet for the assessment years 2009-10 and 2010-11. The informations received in response to notices under section 133(6) and under section 131 of the Act, the same were again forwarded to the Assessing Officer, vide this office letter No. 67, dated April 9, 2013, to verify the facts from the books of account/assessment record and the balance-sheet of Pearl India Ltd., New Delhi. (i) A report was called from the Assessing Officer on the written submission filed by the assessee and information received from Pearl India Ltd., vide this office letters dated December 10, 2012, an....
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.... M/s. Mussadi Lai Hari Kishan Dass Jewellers, Ambala Cantt. All the documents submitted by the assessee appears to be manipulated and, hence, not worth considering. The company Pearl India Ltd. has given the accommodation entries to the assessee-appellant just to cover up the transactions. In view of the facts, it is requested that the matter may be decided on the merits. 8. The report of the Assessing Officer was supplied to the assessee to furnish its comments. The salient points brought in by the assessee on the Assessing Officer's report are as under : 1) No such letter existed in our records till the time of survey. It was only created during the course of survey proceedings to extract more surrender. The following circumstances prove the fact- (a) This letter has been got addressed to a person of the rank of clerk which is never possible as such an important communication could only be made to the managing director or any important person in a limited company. This should have been properly addressed. (b) The contents of this letter are totally incorrect : (i) It has been said that the said letter was written by the appellant on Marc....
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....tatement was recorded at 3 a.m. of the next morning but in a way have confirmed the same. The Assessing Officer has confirmed "all the communications with M/s. Pearl India Ltd. in which they have confirmed to have received payment at a later stage". 4. The Assessing Officer has not given any reason or any finding that how all the documents submitted by the assessee appear to be manipulated and how a limited company worth Rs. 14,000 crores showing the net profit of Rs. 70,87,26,275 could give accommodation entries to the appellant to cover up the transactions. (i) The assessee also referred to the Central Board of Direct Taxes Instruction F. No. 286/2/2003 IT (Inv. II), dated March 10, 2003, on the subject "confession of additional income during the course of search and seizure and survey operation" wherein the Central Board of Direct Taxes has instructed as under : "While recording the 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." The surveying officer has acted in complete disregard to the ....
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....ppellant case and, hence, this judgment too as relied upon by the Assessing Officer does not supports the case of the Assessing Officer. 9. The learned Commissioner of Income-tax (Appeals) considering the submissions of the parties, remand report and material on record deleted the entire addition. His findings in paragraphs 5.11 to 5.18 of the appellate order are reproduced as under : "5.11 I have gone through the facts of the case, the written submission filed by the appellant, remand report of the Assessing Officer and the rejoinder filed by the appellant. It is gathered that the Assessing Officer has made addition of Rs. 90 lakhs on account of additional surrender during the course of survey on June 23, 2009. This surrender was on the basis of document impounded during the course of survey where the appellant, Sh. Vipin Aggarwal, wrote a letter to Shri Gautam Ji, Pearl India, New Delhi, that according to his books for the financial year ending March 31, 2009. He had shown Rs. 90 lakhs as payable which in fact he had already paid and nothing remains payable. The document was signed by Sh. Vipin Aggarwal and the date was mentioned as June 26, 2009, corrected as March 2....
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.... the original copy would not remain in his office rather the appellant would keep carbon copy. No evidence of dispatch of such letter was available. No receipt of having been sent this letter was available on record, no proper address of the company in Delhi was written on the letter. That date on signature had been interpolated and got repeated in such a manner which clearly reflects that this letter was engineered to enhance the surrendered amount. The date of the letter below the signature was written as June 23, 2009, which after correction was written as March 23, 2009. Since the complete date was not changed so the date of survey was corrected in such a manner to give it another month with least cutting and which would pertain to the assessment year 2009-10. The appellant further relied on the Central Board of Direct Taxes circular and judicial pronouncements wherein the hon'ble courts held that the Assessing Officer is not authorised to record statement on oath under section 133A and if such statement has been recorded under section 133A of the Act, it has no evidentiary value. The appellant further emphasised that the statement recorded on oath under section 131 at the ....
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....ening balance was Rs. 1,35,10,686.18. The accounts for the subsequent period also shows that the appellant has made payment on various dates by account payee cheques and the closing balance as on March 31, 2010, was Rs. 35,10,686.18. So, if the appellant has made payment prior to that the question of making payment on subsequent dates by account payee cheques does not arise. The information gathered directly from Pearl India Ltd., New Delhi, through notices under section 133(6) and section 131 shows that there were running accounts with the appel lant and Pearl India Ltd. has shown in its account the payments received on the subsequent dates. The appellant's submission is also considerable that in such situation the original handwritten paper would not remain in the appellant's office rather there could have been a copy and acknowledgment receipt. These facts support the contention of the appellant that the document in question does not belong to the appellant. 5.15 Regarding the statement recorded during the course of survey as well as during the course of the assessment proceedings, it is noted on examination of statement recorded at the time of survey that it sh....
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....s not been disclosed or is not likely to be disclosed before the Income-tax Department. Similarly, while recording the 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 the pending assessment proceedings also, the Assessing Officer should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders.' Even the Central Board of Direct Taxes has taken cognizance of such instances which compel to issue the advisory circular that while recording the statement during the course of search and seizure and survey operations no attempt should be made to be obtained confession to the undisclosed income. 5.17 In the decision given in the case of Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 (SC), the hon'ble Supreme Court held that an admission is extremely an important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to ....
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....ormation is verified by the Assessing Officer in the remand proceedings. Copies of the balance-sheet of the assessee and M/s. PACL Ltd. have been brought on record to justify the findings of the learned Commissioner of Income-tax (Appeals). During the course of survey, statement of the assessee could not be recorded. Since the assessee proved that the seized paper was incorrect, therefore, the retraction from the statement was justified and relied upon the order of the Income-tax Appellate Tribunal, Chandigarh Bench, in the case of Sanjeev Kumar v. ITO [2014] 31 ITR (Trib) 680 (Chandigarh). 11. We have considered the rival submissions and perused the material on record. The copy of the seized paper is filed at page 82 of the paper book. The learned Commissioner of Income-tax (Appeals) correctly noted that date has been corrected in the same by over writing the date, has been repeated below on the letter. The date of survey was June 23, 2009, and corrected date was March 23, 2009, which could not be said to be mere coincidence. The contents of the seized paper say that "for the year ending March 31, 2009", whereas the letter after correction is supposed to be signed on March 23, ....
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....er of Income-tax (Appeals), therefore, rightly considered the Board's circular that in such a situation, the confessional statement should not be obtained because it should be based on credible evidences. 12. The hon'ble Punjab and Haryana High Court in the case of Krishan Lal Shiv Chand Rai v. CIT [1973] 88 ITR 293 (P&H) held that "it is an established principle of law that a party is entitled to show and prove that an admission made by him was in fact not correct and true". The hon'ble Supreme Court in the case of Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 (SC) held that "the assessee should be given opportunity to show that the admission is incorrect or does not show the correct state of facts". The Income-tax Appellate Tribunal, Chandigarh Bench in the case of Sanjeev Kumar v. ITO (supra) held as under (headnote) : "Held, allowing the appeal, that the addition was made without proper evidence and merely on the basis of a statement recorded during the survey, which could not be sustained. No proper enquiry was conducted. Therefore, the addition made was to be deleted." 13. Considering the facts of the case in the light of th....