TaxTMI 
TaxTMI 
2013 (8) TMI 1021
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....n the circumstances of the case and in law the Ld. CIT (A) erred in confirming the addition of Rs. 12,685/- made by the A.O. on account of disallowance against excess remuneration to partners. 5. On the facts and in the circumstances of the case and in law the Ld. CIT (A) erred in not giving the benefit of telescoping, recycling, rotation of funds (except of Rs. 79,928/-) against excess stock against the addition of Rs. 25,00,000/- confirmed on account of surrender of income during the statement u/s 132(4) of Income Tax Act. 2. In ground no. 1 in appeal briefly the facts are that a search under section 132 of the Act was conducted on assessee group on 27.08.2008. The appellant is engaged in the business in trading of medicines in wholesale as well as in retail and returned an income of Rs. 5,23,510/- pursuant to notice under section 153A of the Act. The Assessing Officer recorded findings and held that during the course of search statement of Shri Murari Lal Mittal, partner of the assessee firm was recorded u/s 132(4) of the IT Act on 27.08.2008. In that statement he offered to tax an amount of Rs. 25 lacs as unrecorded income of the firm. The aforesaid statement of Shri Murari ....
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....traction by way of an affidavit is filed immediately on the conclusion of search. The assessee's affidavit came as late as on 31.3.2009 which was not taken as a timely retraction. Since the assessing authority has acted on the basis of statement of the assessee and Assessing Officer has mentioned the documents impounded from premise of the appellant particularly Annexures A-1 to A-13 containing details of his unrecorded income were found and on the basis of such documents, income of Rs. 27,15,292/- and Rs. 1,59,195/- has been offered to tax by Shri Praful Mittal and Shri Murarilal Mittal respectively. He, therefore, found no merit in the arguments raised by the assessee and thus confirmed the addition of Rs. 25 lacs. 4. Assessee's counsel Shri Vijay Goyal in his written submissions as well as orally contends that the statement dated 27.8.2008 of Murarilal Mittal was recorded in a different context. The question no. 9 asked was in different context and there is no discussion nor any question asked about undisclosed income of the firm from his medicine business. In fact, the statement placed at assessee's paper book page 128 will reveal that the authorized officer merely asked for d....
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....ni, 291 ITR 172 (Raj.) wherein it has been held that admission in statement during search is not conclusive proof of fact and can always be explained. The assessee having successfully made a retraction, there was no occasion or basis to make addition of Rs. 25 lacs as undisclosed income of the assessee. The assessee has also placed reliance on the written submissions and case laws referred therein by distinguishing the case laws relied upon by the authorities below in their respective orders. Any statement by a partner or the counter signatures by the lady partner on the statement though do not make admission with reference to material, yet loose their importance after the appellant has made a valid and timely retraction. 5. On the other hand, the Ld. D/R contends that the addition can be made on the basis of statement recorded under section 132(4) of the Act. The appellant is a partnership firm and its partner Shri Murarilal Mittal had made an admission of income earned outside books from transacting business of purchase and sale of medicines and such income stated to have been earned to the tune of Rs. 20-25 lacs and thereafter admitted of making the surrender of his income for ....
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....ng the authorized officer to provide copy of statement so obtained in proceedings under section 132 of the Act. When these statements were not provided, the appellant vide letter dated 3.10.2008 to the authorized officer, copy placed in assessee's paper book page 203 and letter dated 18.12.2008 addressed to the assessing authority requested to provide copy of statement in case the same were to be used against him. Till such time the copy of statement was not provided, assessee entertained a bonafide belief that in the absence of any documentary evidence or corroborative evidence having been found as a result of search, such statement would not be used against him. If such statements were to be used, the department was under legal obligation to have provided copy thereof to the appellant. It is only on persistent effort of the appellant, the copies of statements were provided only on 13.3.2009. The appellant after understanding the legal implication of such statements made a valid retraction as the surrender was not supported by any corroborative evidence. The affidavit filed in this regard is laid on assessee's paper book pages 129 to 131. This affidavit has carefully been perused.....
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....the Appellate Assistant Commissioner of Income-tax or by the Incometax Appellate Tribunal, the assessee should have been called upon to produce documentary evidence, or, at least he should have been crossexamined to find out how far his assertions in the affidavit were correct." (emphasis supplied) The reliance placed by assessee to the judgment by Hon'ble Apex Court in the case of Pullangode Rubber Produce Co. Ltd. (supra) and Hon'ble Rajasthan High Court in case of CIT vs. Ashok Kumar Soni (supra) are well placed as the assessee has successfully demonstrated that the admission made during the course of search is not correct. The ingredient for retraction of statement made during the search, therefore, stand duly satisfied as the assessee is found to have made retraction within a reasonable time immediately after the copies of statement were provided to him. Since the documents found as a result of search were pertaining to the income of the other two persons namely S/Shri Praful Mittal and Murari Lal Mittal and there being no material or evidence on record to show that the appellant has carried any business outside the books for sale and purchase of medicines that could....