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2017 (11) TMI 1151
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....vey under section 133A of the Act was conducted at the business premises of the assessee on 23.11.2010. During the course of survey a diary (loose chit/note book) was found and impounded. Statement of Shri Deven R. Patel was recorded. According to the AO diary contains narration exhibiting receipt of money in cash amounting to Rs. 14.85 crores. The director of the company, Shri Deven R. Patel has admitted such receipts as unaccounted income. However, while verifying the returned income, it revealed that such income has not been shown, and therefore, he issued a show cause notice to the assessee asking him to explain as to why the above amount of Rs. 14.85 crores should not be added to total income of the assessee. In response to the show cause notice the assessee has filed a letter dated 13.1.2014. The AO has reproduced copy of the letter in the assessment order from page nos.2 to 11. Thereafter, the ld.AO has summarized main points of the stand taken by the assessee in its submission. The submissions/stand point of the assessee as construed by the AO reads as under: i). No such amount of cash of Rs. 14.85 Crore has been received by the company as the land in question was ....
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....ect. Thereafter, he made analysis of other entries and assumed that these are cash received by the assessee on sale of Vatva land. For buttressing his contentions, he took corroborative support from the disclosure statement of director, Shri Deven R. Patel. The AO in this way, drew conclusion that assessee intended to sell land at Vatva and in that process, it has received on-money in cash, which has not been accounted for in the books. This has been treated as undisclosed income. The ld.AO in this way has made addition of Rs. 14.85 crores. Appeal to the ld.CIT(A) did not bring any relief to the assessee. The ld.CIT(A) has concurred with the AO and confirmed addition. Discussion made by ld.CIT(A) reads as under: "8. The second and third ground of appeal are against the addition of Rs. 14.85 crores made by the AO considering this amount as 'on-money' receipt of the appellant company, which has not been disclosed to the department in regular books of accounts. Facts of the case is that a survey u/s 133A of the Act was conducted on the business premises of the appellant on 23-11-2010. During the course of survey, some documents were found in the form of diary, which s....
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....placed relevant portions of the documents found & statement recorded by scanning the same & made part of the assessment order. 8.2 In the written submissions filed before the AO and during appellate proceedings, the appellant objected to the additions made. The submissions of the appellant have been reproduced in full in paras above. The contentions of the appellant are summarized under the following points : i) The appellant contended that this diary was prepared by Shri Devan Patel, Director of the company, on the request of the survey party stating that if he prepares details like this and disclose certain amount, the case of the company as well as individuals will be closed easily without any trouble and under the wrong impression and without understanding properly the repercussion of this act and both the directors agreed to the demand of the survey party. The appellant stated that there are several anomalies in the diaries found. ii) Second contention is that the land under consideration for which 'on-money' has been stated as received was under litigation at various level. There were several matters pending before various authorities pertai....
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.... investigation on the spot are considered true & correct and the facts narrated after long time can only be considered as afterthought to create confusion and evade liability of payment of tax. The appellant tried to do the same in this case. In reply to Q.No.14 of the statement, Shri Deven R. Patel, Director of the appellant company admitted that the company introduced its own unaccounted money to the extent of Rs. 5,35,65,000/- in the name of two entities namely M/s Jupiter Business Ltd. and M/s Sudarsan Enterprise. The Director admitted this amount as unaccounted income for the AY 2008-09 and surrendered the same for taxation. But the appellant is silent on this issue. These facts prove that the appellant made false allegation about the preparation of the diary during the survey proceedings. 8.4 Regarding the anomalies in the contents of the diary as stated by the appellant, it is for the directors of the Company to explain these anomalies. The diary was found at the premises of the appellant, owned by the directors and contents were admitted & explained by the Directors of the company. The onus is upon them to explain the so called anomalies. When the payment shown thr....
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....Patel, Director of the company merely stated the facts, which have been placed before him on the basis of document found during the course of survey. The statement is simply explaining the facts mentioned in these documents. Admission of undisclosed income was not without evidences but on the basis of clinching written evidences. Name of the appellant company mentioned in the diary, amount was written in clear figures monthwise and the amount admitted as received by both the directors of the appellant mentioned as payment through cheques tallies with the bank accounts of the appellant. Therefore, the statement given by the directors of the company is nothing but stating the facts mentioned in the document found during the survey. Regarding the various cases laws cited by the appellant, the facts of the appellant's case is distinguishable for the reason that the statement has been made on the basis of written evidences found and the additions have not been made only on the basis of statement recorded during the survey by the AO. Even in absence of statement of the directors or denial of directors about these contents, additions must have been made by the AO because the amount, m....
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.... the ld.CIT(A) demonstrating circumstances against the probability assumed by the AO of receipt of on-money. In his first fold of contentions he pointed out that the assessee-company was incorporated to acquire immovable properties, develop the same and thereafter re-sale of such developed property. In order to buttress this proposition, the assessee has filed copy of memorandum of association and articles of association as Annexure-I before the ld.CIT(A). According to the ld.counsel for the assessee this business profile would contain three types of activities viz. (a) acquisition of immovable property, (b) development of such property and makes it ready for sale to earn profit, and (c) sale of such developed immovable property. In order to achieve its objects, the assessee-company entered into a deed of conveyance with SLM Maneklal Industries Ltd. on 21-3-2007. Understanding between the assessee and SLM Maneklal Industries was subject to various conditions. The ld.counsel for the assessee took us through copy of the deed available at page no.74 to 93 of the paper book, and drew our attention towards clause (6) of such deed. He pointed out that the assessee agrees to discharge cla....
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....and Vishnubhai Patel is without any corroborative evidence, and if the on-money assumed to be belonged to the assessee-company, then, there was no need to be noted of the same transactions by two different directors, which itself doubts correctness of the noting. Therefore, finding of the Revenue authorities with regard to the transactions recorded in the diary is devoid of any merit. It is further averred that there are disparities in the findings of the Revenue authorities so much so that the ld.Revenue authorities referred to only "one diary" found during the course of search and the alleged on-money being mentioned at "Rs.14,85,00,000/-". In fact there are two diaries and the alleged amount was sum total of two diaries. This fact demonstrates that diary was being prepared after recording of the statement. It is also pointed out that the loose papers found during the course of search do not correlate the details mentioned in the diary and vice-versa, and therefore, they have no evidentiary value. It is further submitted that in the case of sale/purchase of immovable property, in normal course, where on-money is involved, some cheque payment followed by on-money is to be made in ....
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....el have filed their affidavit during the course of assessment proceedings retracting disclosure made at the time of survey. Copies of these affidavits are available on page nos.191 to 198 of the paper book. Shri Deven Patel in his affidavit has alleged that receipt of Rs. 7.80 crores in cash noted in certain loose papers was not found, rather noting in the diary was made during the course of survey only. He met with Chief Commissioner also and appraised him what happened during the course of survey. Since, we have to frame prima facie case on the basis of circumstantial evidences, therefore, it is necessary to take note of this affidavit which has explained the position of assessee. It reads as under: "I, Devan R. Patel, aged about 40 years residing at 11, Shyam Vihar Bunglow, Thaltej, Ahmedabad, do solemnly state and affirm as under: 1. That I am the Director in Texraj Realty Pvt. Ltd., a Company incorporated on 13th March 2007 and I am one of the initial Director in the said Company. 2. That I look after the complete business of the Company i.e. pertaining to the purchase of land from SLM Industries Ltd., the various court matters going on in the said C....
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....lled the concerned officer and the Joint Commissioner, Range-8, and warned then not to repeat such instances in future. Whatever stated above is true and correct and, no part of the relevant fact has been eliminated or hidden. 9. Similar affidavit was filed by other director which is available on the record. During the course of hearing, we have been appraised as to how statement recorded under section 133A has to be appreciated. Decision of Hon'ble Kerala High Court in the case of Paul Mathews and Sons Vs. CIT, 263 ITR 101 (Ker) was brought to our notice. Similarly, proposition laid down in this decision was approved by Hon'ble Apex Court in the case of CIT Vs. S. Khadar Khan & Sons, 25 taxmann.com 413 wherein the Hon'ble Supreme Court has upheld decision of Hon'ble Madras High Court which has referred judgment of Hon'ble Kerala High Court. In both these cases, it has been propounded that section 133A authorizes survey team to record statement, but such authorization is for recording of statement without administering an oath and statement recorded without oath has just a corroborative value as information. It is not an evidence per se. Relevant discussion made in the ....
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.... 133A does not empower any ITO to examine any person on oath. Thus, in contra-distinction to the power under Section 133A, Section 132(4) of the IT Act enables the authorised officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the IT Act. On the other hand, whatever statement recorded under Section 133A of the IT Act is not given any evidentiary value obviously for the reason that the officer is not authorised to administer oath and to take any sworn in statement which alone has the evidentiary value as contemplated under law. Therefore, there is much force in the argument of the learned counsel for the appellant that the statement, elicited during the survey operation has no evidentiary value and the ITO was well aware of this." 10. Thus, alleged disclosure was retracted by directors by virtue of the above affidavits and disclosure was a simplicitor as information. In the affidavit the assessee has leveled serious allegations against survey team pointing out that no such entries were found at the time of survey. They were noted during the course of survey under pressure of the survey team. When suc....
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....y in liquidation. Mr. Oza, therefore, cannot content that the sale in favour of M/s. Tex Raj is valid and out of the purview of Companies Act, 1956". (Emphasis Supplied) Para No. 34, 35 and 38 of the said order is as under "34] Once a conclusion is reached that the sale in favour of M/s. Tex Raj is illegal, then, all that remains for consideration is whether this Court should grant the request of the Official Liquidator to nullify it or consider the request made by the purchaser to save the transaction". "35] In that context, what has been argued is that the sale is confirmed in March and July 2007 and none have come forward to object to the sale. The chain of circumstances would indicate that there is no malice and there is no fraud. Even the Official Liquidator does not allege any such thing. There is no allegation that sale is not in the interest of the secured creditors. The argument of Mr. Oza is that assuming the sale by the Company in liquidation is dishonest but there is no allegation that M/s. Tex Raj had knowledge or was a party to this dishonesty or fraud. What the Court has before it is the Official Liquidator's report and some allegations....
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....dator is referring to any particulars and producing any proof to show that fraud has been perpetrated by the officers/ directors of Company in liquidation acting in collusion with M/s.Tex Raj." 12. We have gone through complete order available on the paper book and found that at the time of survey, litigation was pending before the Hon'ble Bombay high Court in Company Petition between vendors of the assessee vis-à-vis other financial institutions. Rights in the land have not been crytstallied in favour of the assessee before the Hon'ble Bombay High Court. Decision was pronounced on 21.10.2011 whereas survey was conducted on 23.11.2010. Similarly, the assessee has brought to the notice of the AO that Civil Court in Ahmedabad has also granted status quo with respect to the land on an application filed by the GIIC. It has brought to the notice of the AO order of the Civil Court dated 6.9.2011 whose copy is available on page nos.188 to 190 of the paper book. Thus, the assessee was not having absolute alienable rights in the land at the time of survey. 13. We also find that name of any purchaser was not mentioned in the diary. It is highly improbable that a sum of Rs. 14.85....