2016 (11) TMI 948

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....urvey, in proceedings under section 143(3) of the Income Tax Act, 1961; in short "the Act". 2. The assessee-firm is in building and construction business. The department carried out a survey in its case on 30-01-2008 at its site/premises. It recorded statements of assessee's partners s/sh Manish K. Kapadia and Bhavesh Patel disclosing unaccounted income in question of Rs. 2,35,27,525/-. The assessee filed return on 17-09-2008 admitting income of Rs. 89,13,315/-. The Assessing Officer took up scrutiny and noticed the assessee to have offered unaccounted income of Rs. 76,10,250/- thereby retracting from that disclosed during survey to the tune of Rs. 1,59,17,275/-. The assessee inter alia pleaded that its partners' statements were based on....

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....ncurred till the date of survey during financial year 2007-08 (A.Y. 2008-09) only. While making the retraction of income it was explained that the expenses towards development and construction in the financial year 2006-07 (A.Y. 2007-08) of -Rs.2,19,95,303/- which was already on the records of the Department by way of return of income and accompanying audited accounts had not been taken into consideration. Further, the survey proceedings continued through the whole night despite not a single incriminating document or loose paper being found, only supports the claim of the appellant that the disclosure was not voluntarily made. It is seen from the statement question /answer No.26 that neither the question nor the answer given by the partner ....

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.... unearthed during survey. Even after retraction of statement (in part), the A.O. did not make any attempt during the assessment proceedings to collect evidence of unexplained investment of the appellant so as to counter the reason given for retraction. No addition can be made simply on the basis of statement recorded in survey/search proceedings, more so when it has been retracted and justifiable reasons for retraction are offered. The decision of the Jurisdictional High Court and the Tribunal in the case of Ratan Corporation, Nirmal Textiles, Pramukh Builders, Kailashben Manharlal Choksi and Ashok Manilal Thakkar all support the case of the appellant that no addition to income can be made only on the basis of disclosure in statement withou....