TaxTMI 
TaxTMI 
2017 (12) TMI 988
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....ri S.L. Kochar and Shri Anil Kochar Ld. Advocate appeared on behalf of assessee and Shri Saurabh Kumar, Ld. Departmental Representative appeared on behalf of Revenue. 2. Solitary issue raised by assessee in this appeal is that Ld. CIT(A) erred in confirming the order of Assessing Officer by sustaining the disallowance of Rs.3,06,28,425/- on account of unexplained investment u/s 69 of the Act. 3. Briefly stated facts are that assessee is a private limited company and engaged in manufacturing / trading of bidi and trader of electronic goods. The assessee carries on its manufacturing of bidi activity under the trade name M/s Kalpana Biri Manufacturing Co. Pvt. Ltd. The assessee has its manufacturing units / branches for bidi at three places as detailed under: a) Aurangabad factory b) Omarpur Branch c) 16 Mile Malda Branch Similarly, assessee was carrying on its electronic business under two names at two different places as detailed under:- i) KBM Electronics, having its address at 1/32, Man Vikas Marg, New Delhi- 92 ii) Kalpana Digital World, having its address at 1/10, 12 Main Vikash Marg, New Delhi-92 The assessee filed its re....
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....ing:- Tobacco leaves Aurangabad (factory) 4,80,300 kg 8005 bag (60 kg/bag) Aurangabad outside factory godown College para) 1,74,960 kg 2916 bags 60 kg/bag Aurangabad (Dathata garden) 1,47,600 kg 56,800 kg 3280 bg of 45 kg 948 bags of 60 kg) Omarpore (factory) 4050 kg 5700 kg 90 bags of 45 kg 95 bags of 60 kg Malda (factory) 1,98,600 kg 3310 kg of 60 kg bag Total 10,62,880 kg. Bidi:- Bidi variety Manu-13 Man 25 Kalpa 25 Bhanat 25 Parbadi Aurangabad (factory) 150 pkt x 37440 56,16,000 stock 115 pkt x 48000 55,20,000 stock 82 pkt x 48000 39,36,000 stock 82 pkt x 48000 3936000 stock 178 pkt x 31680 56,39,040 stock 2,4647,040 stock Malda 162 pkt x 37440 60,65,280 stock 123 pkt x 48,000 59,04,000 stock 93 pkt x 48000 44,64,000 stock 117 pkt x 48000 56,16,000 stock 184 pkt x 31680 58,29,120 stock 478784 stock Omarpur 58 pkt x 37440 21,71,520 82 pkt x 48000 34,36,000 62 pkt x 48000 29,76,000 58 pkt x 4800 27,84,000 53 pkt x 31680 16,79,040 43546 Total 6,60,72,000 Above mentioned valuation ....
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....u have considered in this current year till date. Ans 8: Sir, I am accepting the survey finding and on the basis of survey finding I am disclosing Rs. 3.00 crore as additional income in this current year and immediately paying Rs. 50 lakh as advance tax. I am also giving two post dated cheque of Rs. 25 lakh each dated 30.04.10 and 30.06.10 respectvely. Q. 9 Do you want to say anything else? Ans 9: No, Sir, Thank you. The above statement given by me to the best of my knowledge and belief and without any force or coercion and second mind. Sd/- Alauddin Biswas 29.3.10" From the above statement, it is clear that assessee during the course of survey proceedings accepted under valuation of closing stock for Rs.3,06,28,425/-. However, assessee has not offered the same in its return of income. Therefore, AO called upon the assessee to explain why the stock found during the course of survey should not be added to its total income. In response to the notice the assessee made the submission as detailed under:- a) The survey was conducted at the Aurangabad factory of the assessee only but there were two more branches of assessee as disclosed but no sur....
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....sed to be de extracts or copies therefrom. b) During the inspection, the survey team also directed us to produce Biri stock Book, Leaves Stock Register and Tobacco Stock Register of our other two manufacturing unit/Branches namely Omarpur Branch and 16 Mile Malda Branch of the Company for the purpose of their inspection. According to the direction of the Survey Team, we brought those books from those Branches and produced those books for the purpose of inspection of the Survey Team. However none of the survey team members physically visited those Branches. c) We also afforded them the necessary facility to check and verify the cash, stock of raw materials and finished goods and other valuable articles or things which were found in the our company's Aurangabad factory. d) An inventory of cash of Rs. 14,96,160.00(Rupees fourteen lacs Ninety Six Thousand One Hundred Sixty) only of Aurangabad Factory was prepared. e) An inventory of books of account, (of those Books of accounts which they thought necessary) was also prepared, placed marks of identification on the books of account or other documents and out of that list some of the books of account we....
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....pared under section 131 of the Income Tax Act, 1961. I denied to sign the statement and earnestly placed the question as I did not know what was written in the statement hence I would not sign the statement. It was then communicated that, that statement was as same as taken earlier but only thing additionally written there was a commitment to deposit Rs. 1 core within 31/03/2010. Hearing this I further expressed the our company's inability and denied to sign the statement. This tragedy went on till about 11 p.m. 7. I came to the Office/Factory at about 11.30 A.M as I generally come to the factory taking break first only. After starting of survey operation I was the with the survey team. I not even moved for taking lunch so that my absence may not cause any hardship to the survey team. I not even moved to take information of situation of my father, Sri Siddique Biswas, aged about 84 years (Then), who is suffering from prolong illness. The survey was continuing more than 10 hours. All these cumulatively affected my mental and physical strength and broke down. At about 11 p.m. I put my signature mechanically wherever the authorized officer directed to get rid of this most pat....
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....pany had no other alternative but to deposit the commitment amount of Rs. 25,00,000.00 which was due on 30/04/2010 and our company deposited the same on the same day in order to keep our commitment. 12. On payment of said Rs. 25,00,000.00 on 30/04/2010, we intimated the matter to the Authoried Officer and prayed to return the post dated cheque of Rs. 25,00,000.00 dated 30/04/2010 on 19/05/2010. This request was also kept unanswered. 13. On 28/06/2010, we prayed for stop collection of Rs. 25,00,000.00 which was due to be deposited on 30/06/2010, as all the deposits of tax which were made after survey would result huge refund only which was unwanted and further requested to return the cheque dated 30/04/2010. But no response was received. 14. On 22/09/2010, we further prayed for stop collection of rest amount of Rs. 25,00,000.00 stating detailed facts of it's financial position and placing a cheque of blank amount and blank dated (vide No.430951) issued in favour of the Income Tax Department as per instruction of the then Ld. ACIT, Circle Murshidabad. The Ld. ACIT Murshidabad ultimately ordered for stop collection of rest amount of Rs. 25,00,000.00 which wa....
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....re Ld. CIT(A) assessee has made several submission as detailed under:- i) The statement was recorded u/s.131 / 133A of the Act under duress and therefore it was not confessed that there is under valuation of closing stock; ii) The question No. 5 of the statement taken u/s. 131 of the Act says that the physical stock was taken in the presence of employee but it is clear from the statement that there is no signature of any employee therein. iii) The assessee immediately after the survey applied for certified copy of the statement taken u/s. 133A/131 of the Act. However it was served on 14.03.2012 after a gap of almost two years. Thus, there was delay in filing the retraction statement. iv) The assessee immediately after the receipt of the statement submitted a letter dated 27.03.2012 narrating the fact that the statement was obtained under coercion. The assessee also submitted that even during assessment proceedings it was denied that the assessee has accepted in his statement u/s. 131 of the Act that there was under valuation of closing stock. The delay in filing the retraction statement occurred due to the fact that the revenue did not provide th....
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....re available were wrong and fabricated. In view of the above it is held that the AO had correctly added the excess stock found during the course of investment u/s. 69 of the IT Act. The appeal made on this ground is dismissed." Being aggrieved by this order of Ld. CIT(A) assessee came in second appeal before us. 6. Before us Ld. AR reiterated the same arguments that were made before Ld. CIT(A) and he stated that the issue may be decided on merit. On the other hand, Ld. DR heavily relied on the order of Authorities Below. 7. We have heard the rival contentions of both the parties and perused the materials available on record. In the instant case a survey was conducted at the factory premises of Aurangabad on 29.03.2010. During the course of survey, physical stock was inventoried which was compared with the stock maintained in the books of account. The AO found the difference between the physical stock recorded in the books of account for Rs.3,06,28,425/-only. Accordingly, the AO recorded the statement of the assessee u/s 131 / 133A wherein the assessee admitted the suppression / under value of closing stock and agreed for the addition of the impugned amount. However, the as....
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....e before the AO. The relevant extract of the said submission of assessee is reproduced below:- "a) Your assessee afforded every facility to the income tax authority to inspect its books of accounts, other documents as requisitioned. All the books of accounts that are maintained were produced before the Authority for the purpose of the inspection. The Survey Team duly inspected the books of accounts, other documents as they required and made or caused to be made extracts or copies there from. b) During the inspection, the Survey team also directed your assessee to produced Biri Stock Book, Leaves Stock Register and Tobacco Stock Register of other two manufacturing unit/ Branches namely Omarpur Branch and16 Mile Malda Branch of the Company for the purpose of their inspection. According to the direction of the Survey Team, your assessee brought those books from those Branches and produced those books for the purpose of inspection of the Survey Team. However none of the survey team members physically visited those Branches. c) Your assessee also afforded them the necessary facility to check and verify the cash stock of raw materials and finished goods and other valuable articles or ....
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....the course of survey u/s 133A on 29.03.2010 I do sworn in the name of God whatever I shall speak or state before the Income Tax Department, the whole is truth and nothing but the truth. Oath given by Oath taken by Sd/ Alauddin Biswas 29/03/10 Sd/- Illegible 29/03/10 Q.No. 1: Please identify yourself? A. 1: I am Sri Alauddin Biswas s/o Siddique Biswas, director of M/s Kalpana Biri Manufacturing Co.(Pvt) Ltd, residing at Collegepara, P.O. Aurangabad Dt. Msd. Aged about 46 years. Q. No.2: Give the details of branches and other manufacturing unit are maintained by you? A.2: We have two manufacturing unit / branches mainly (1) at Baisnabnagar, Malda (2) At Umarpur, Ghorsala, Murshidabad and Head office at Aurangabad, which is also a manufacturing unit. Q. No.3: Give the address of the sales unit of this company? A. 3: We have two sale units (1) At Pandua, Kalna Road, Hooghly (2) At 1/32, L.P Main Vikash Marg, Laxmi Nagar, Delhi-92 Q. No.4: On your accounts it is seen that there is two divisions named (1) KBM Electronics & (2) Kalpana Digital World exist, what are the legal prov....
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....Surveys conducted by the Department. It is also seen that many such admissions are retracted in the subsequent proceedings since the same are not backed by credible evidence. Such actions defeat the very purpose of Search/Survey operations as they fail to bring the undisclosed income to tax in a sustainable manner leave alone levy of penalty or launching of prosecution. Further, such actions show the Department as a whole and officers concerned in poor light. 2. I am further directed to invite your attention to the Instructions/Guidelines issued by CBDT from time to time, as referred above, through which the Boards has emphasized upon the need to focus on gathering evidences during Search/Survey and to strictly avoid obtaining admission of undisclosed income under coercion/undue influence. 3. In view of the above, while reiterating the aforesaid guidelines of the Board, I am directed to convey that any instance of undue influence/coercion in the recording of the statement during Search/Survey/Other proceeding under the IT Act, 1961 and/or recording a disclosure of undisclosed income under undue pressure/coercion shall be viewed by the Board adversely." Fr....
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....k or one or two days in a fortnight, I, Alaudding Biswas and/or A/R of the Company met him as and when he was available at Berhmpre Office for certified copy of the alleged statement claim to have taken u/s. 131, signature on which was taken under duress. But each and every time, the authorized officer avoided the issue taking different types of plea, not in this week, that will be available coming week etc. etc. by this time April, was going to over...." xxxxxxxxxxxxx 16. Our company further prayed for certified copy of order sheet, alleged deposition claimed to have taken u/s.131 signature eon which was taken under duress, deposition under section133A etc by further depositing fess of R.2000.00 (vide Ch No.51961 BSR. Code No.0510308 dated 01/03/202) and on 14/03/2012 your assessee company has received the certified copy of the above stated documents and come to know the materials of the deposition claimed to have taken under section 131 of the Income Tax Act, 1961, signature on which was taken under duress, is full of facts and figures which are not true. xxxxx" 7.3 It was also observed that the CBDT vide File No.414/105/2008-IT-(InV1) has directed t....