TaxTMI 
TaxTMI 
2018 (1) TMI 333
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..... CIT (A) has erred in rejecting the statement of one of the partners Shri Inderjit Singh Khokhar recorded u/s 133A of the I. T. Act during the survey conducted on 19/09/2008 wherein the partner admitted an amount of Rs. 1.20 Cr as additional income during the relevant financial year." 2) "On the facts and circumstances of the case and in law, the Id. CIT(A) has erred in accepting the retraction of the statement of partner recorded u/s 133A almost 1 month after without giving any reasons & cogent evidence of using of threat & coercion by the AO during the survey proceeding." 3) "On the facts and circumstances of the case and in law, the Id. CIT (A) has erred in accepting that assessee had disclosed an amount of Rs. 1.20 Cr during the survey proceeding, though the circumstantial evidence, impounded papers & impugned cash transactions and admission by the assessee, purported that these cash transaction were done in the relevant financial year. 4) For this and other reasons it is submitted that the order of the CIT (A) may be set aside and that of the AO restored. 5) The appellant craves leave to amend or alter any ground or add a new ground which m....
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....the course of survey operations conducted by Revenue u/s 133A. The assessee also brought to the notice of the AO observations of the Hon‟ble Bombay High Court while disposing of writ petition on 06-01-2009, directions to decide entries in the accounts on merits. The assessee, thus, submitted that an income of Rs. 1.20 crores which was declared during the course of survey operations u/s 133A on 19-09-2008 was not included in the return of income filed with Revenue as the said statement was taken forcefully by Revenue from partner of the assessee and the same was retracted by the assessee. It was also submitted that the statement recorded during the course of survey operations u/s 133A does not have any evidentiary value as the officer is not empowered to administer oath. The AO referred to several additions made during the course of assessment proceedings conducted for AY 2007-08 and 2008-09. The AO also referred to the discrepancies in the books of accounts such as non entry of one bill impounded during survey in books of accounts and some other discrepancies in the bills etc. . The A.O rejected the contentions of the assessee and made the addition of Rs. 1.20 crores mainl....
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....le and to beat the time barring limitation, the assessment was framed based on the material available on records. Thus, the AO made additions to the tune of Rs. 1,20,00,000/- to the income of the assessee on account of amount surrendered by the assessee during the course of survey operations u/s 133A, vide assessment order dated 28-12-2011 passed by the AO u/s 143(3) of the 1961 Act. 4. Aggrieved by the assessment order dated 28-12-2011 passed by the AO u/s 143(3), the assessee filed an appeal before the learned CIT-A and made detailed submissions. The learned CIT(A) after considering the submissions of the assessee deleted the additions of Rs. 1.20 crores, by holding as under, vide appellate order dated 10-11-2014 passed by learned CIT(A):- " 24. I have perused the assessment order passed by the AO as well as the submissions made by the AR of the appellant and all other material placed on record carefully. 25. The AO has made the following additions on account of additional income declared by the appellant during the course of survey u/s. 133A at their premises on 19/09/2008. The heads under which the disclosure was made are as under:-  ....
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....ing to the survey action at our office premises on 19/20-09-2008, we' have to state that during the course of survey action statement of our partner Mt Sarabjit Singh Khokar was forcibly taken by the Assistant Commissioner of Income Tax, Circle-18(1). The said statement was written and prepare by the ACIT, Circle 18(1) and our partner was not allowed to read the contents of the same and was forced to sign the same under the circumstances as mentioned in our letter dated 29/09/2008. Thus, we state that the said statement has not been given voluntarily and therefore the statement may be treated as retracted as the disclosure of additional income of Rs. 1,20,00,000/- was taken through intimidation and threats given during the survey. As we have already requested not to deposit the four post dated cheque of Rs. 10,00,000/- each taken forcibly from us, we may state that there was no concealed income, which was found during the course of survey and once again request not to deposit the cheque." 32. It is clear from the above retraction letter filed before the AO that the appellant has leveled not only the serious allegation of threat and coercion but also a....
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....l-accepted principle that an admission is not conclusive evidence as to the truth of the matter stated therein. It is only a piece of evidence the relevancy of which is required to be judged basing on the material evidence and circumstances in which it is made. 36, In the decision in Pullangode Rubber Produce Co, Ltd. vs. State, of Kerala 1972 CTR (SC) 253: (1973) 91 ITR 18 (SC), the apex 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 show that it is incorrect. 37. Statement of the surveyed party recorded during the course of survey proceedings under section 133A has no evidentiary value. 38. In the case of COMMISSIONER' OF INCOME TAX vs. S. KHADERKHAN SON (2008) 214 ITR (Mad) 589 :(2008) 300 ITR 157 (Mad), it has been held that "Sec. 133A does not empower any IT authority to examine any person on oath, hence, any such statement has no evidentiary value and any admission made during such statement cannot, by itself, be made the basis for addition," 39. In the case of INCOME TAX OFFICER vs. VIJAY KUMAR KESAR, (....
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....at is the nature of these transactions and further as to whether these are business transactions or some other transactions. During the assessment proceedings, the AO simply relied on this statement and made an addition of Rs. 62,00,000/-, on account of cash receipts despite knowing fully well that statement recorded during the survey has already been retracted in the post survey proceedings. Since the statement was already retracted by the appellant the AO, should have made further independent investigations to prove that the appellant had received the above cash payments. But no efforts were made in this direction and the AO proceeded to make the additions on the basis of the admission of additional income in the statement recorded during the course of survey u/s 133A. 41 The addition made merely on the basis of statement recorded during the course, of survey, without any further corroborative evidence, cannot be held to be justified. The additions cannot further be sustained in view of the allegation that the disclosure of additional income under the various heads was taken forcefully and the partner of the firm Shri. Inderjit Singh Khokhar was forced to sign the statem....
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....losed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, AOs should rely upon the evidences/materials gathered during the' course of search/survey operations or thereafter while framing the relevant assessment orders." 43. In view of the above CBDT instructions also, it would not be open for an assessing officer to make an assessment merely on the admission of additional income made in the statement recorded during the survey u/s 133A It has been made amply clear in the above instructions that an Assessing Officer should rely solely upon the evidences and materials gathered during the survey for making additions and framing the assessment orders and the statements or confession taken during the survey do not serve any useful purpose. 44, In view of the facts and' circumstances explained above, in my considered opinion, there is no justification for making addition of Rs. 62,00,000/- to the income of the appellant on account of cash receipts as there is no credible evidences placed on record to prove the same. As far as the paper placed at page 175 of the impounded material is c....
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....the period April to August 2008 which we offer for tax over and above our regular income Q. 18 00 you want to say anything else? Ans: Yes, Whatever stated above is true and correct to the best of my knowledge. We have declared a sum of Rs. 62,00,000/- (Rupees sixty two lakhs only) on account of cash receipts, Rs. 46,00,000/- (Rupees forty six lakhs) on account of unproved vouchers/expense, Rs. 12,00,000 (Rupees Twelve lakhs) on a/c of capital introduced by the partners during the period 01/04/2008 to 31/08/2008 totalling to Rs. 1,20,00,000/- (Rupees One crore Twenty lakhs only) over and above our regular income to buy peace of mind and to avoid any penal action. We anticipated that no penal action will be imposed/initiated upon us taking cognizance of above declaration Further, we the partners of the M/s. Oriental Decorators confirmed that the above statement is given by us without any threat, coercion or undue influence on us." 47. It is clear from the above answers to the questions that the above additions have been made by the AO solely based on the statement recorded during the course of survey proceedings u/s 133A. There is no mention of any document....
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.... above, in my considered opinion, there is no justification for making addition of Rs. 58,00,000/- to the income of the appellant on account of unaccounted purchases, labour charges, site expenses, salary, & wages, octroi/transportation, conveyance and capital introduction by the partners, as there is no credible evidence, placed on record to prove the appellant had incurred the above expenses and not recorded in the books of accounts, These additions have been made purely on the basis of statement recorded during the course of survey u/s 133A which was later on retracted. In the absence of any other corroborative evidence placed on record by the AO to support the additions made, such addition made cannot be sustained and hence additions made amounting to Rs. 58,00,000/- is hereby deleted. 50. Regarding the instances of additions made in the case of the appellant for the AY 2007-08 and 2008-09 quoted by the AO in the assessment order, there is no relevance of quoting these instances for the year under consideration as every assessment year is separate assessment year and the principle of res judicata does not apply to the income tax proceedings. The additions made in those....
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.... and the expenditure has been incurred, the same should have been added back to the income of the assessee. the only explanation offered by the appellant is that these bills were not accounted for due to oversight. Such an explanation cannot be accepted. The AO is directed to add back the above amounts of Rs. 88,004/- and Rs. 27,000/- as unaccounted expenditure u/s. 69C of the I.T Act 1961. 55. Regarding the other discrepancy of two bills of M/s Weather Cool Sales, of Rs. 61,03,450/- and Rs. 21,19,636/- were recorded in the final accounts as Rs. 60,40,584/- and Rs. 20,97,804/- respectively, the AR of the appellant has contended that this difference in the amounts is on account of Tax Deducted at Source. The AR of the appellant has also filed the copy of the Ledger account of the above party (placed at annexure S of the paper book) wherein it is clear that though the amount of the bill is Rs. 61,03,450/- after deducting TDS of Rs. 62,866/-, the net amount credited to the account of the above party is Rs. 60,40,584/-. Similar is the case in respect of the amount of Rs. 21,19,636/-, out of which TDS of Rs. 21,832/- has been deducted and net amount credited to the account of t....
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....f income to the tune of Rs. 1.20 crore from the partners of the assessee. It was submitted that inspection of the computer was done on 06-10-2008 by P system which showed last updation of data base entry on 20-09-2008 and alterations were carried out in the midnight of 19/20-09-2008. Our attention was also drawn to page no. 83 to 84 and 86 to show that the files of tally were manipulated and modified during the course of survey operation at the mid-night of 19/20-09-2008 to suit the forced confession from the partner of the assessee. It was submitted that survey started on 19.09.2008 and ended on 20.09.2008 and letter was written by the assessee on 29.09.2008 retracting the said surrender of income through an advocate. It was also submitted that retraction letter dated 16-10-2008 was given before the tax authorities retracting from the surrender of the income to the tune of Rs. 1.20 crore. It was submitted that the writ petition was filed by the assessee with Hon‟ble Bombay High Court on 05-12-2008 which was later withdrawn on 06-01-2009 on the assurance of CBDT that the grievance of the assessee will be looked into. It was submitted that there was forced confession obtained ....
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..... On account of site expenses 3,67,000 5. On account of octroi & transportation 1,10,000 6. On account of wages & salaries 12,77,000 7. On account of travelling & conveyance 46,000 8, On account of capital introduced partners by 12,00,000 Total disclosure 1,20,00,000 " . The assessee filed return of income on 30.09.2009 declaring total loss of Rs. 44,18,980/- . The assessee,however, did not included income of Rs. 1.20 crores which was on account of disclosure of concealed income made during the course of survey operations conducted by Revenue u/s 133A on 19-09-2008, in the aforesaid return of income filed with the Revenue. The assessee immediately after conclusion of survey u/s 133A vide several written communications to the income tax authorities including CBDT as well during the course of assessment proceedings u/s 143(3) r.w.s. 143(2) had consistently submitted that the statement recorded by Revenue during the course of survey operations u/s. 133A of Shri. Inderjit Singh Khokhar was not voluntarily recorded as the same was recorded by Revenue after threatening/coercing the partners of the ....
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....okhar on behalf of assessee as its concealed income for the previous year relevant to the impugned assessment year The assessee vide letter dated 16-10-2008 also retraced from the statement of its partner recorded on 19-09-2008 during the course of survey action u/s 133A. It is also been explained that there was no discrepancy in the books of accounts although some of the bills were not entered in the books of accounts when survey took place and so far as discrepancies in the books of accounts and bills are concerned, same were explained to be on account of differential due to VAT/TDS. The assessee has also explained that preceding years additions as made by Revenue stood deleted at appellate forums . All these contentions of the assessee had remained un-rebutted by Revenue even before us. It was also explained by the assessee that Writ Petition was filed with Hon‟ble Bombay High Court on 05.12.2008 copy of which is placed at paper book at page no. 54 to 105 but the same was withdrawn by the assessee as the Revenue had assured that grievance of the assessee will be suitably addressed. In the said writ petition, allegations of very serious nature are made by the assessee again....
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....l grievances relating to entries in books of accounts before the authorities during the course of assessment proceedings. CBDT vide letter dated 03-11-2008 has also written letter to the assessee assuring suitable action to resolve grievance of the assessee which is placed on record in paper book. The assessee filed its return of income on 30-09-2009 wherein the said surrendered income of Rs. 1.2 crore was not declared as income in the return of income filed with revenue consequent to the survey u/s. 133A. Thus, in nutshell the assessee made the retraction of the said surrendered income of Rs. 1.20 crore vide letters dated 29.09.2008, 16.10.2008, filing of writ petition with Hon‟ble Bombay High Court and several other communications with the tax-authorities including CBDT which are placed in record in paper book filed with the Revenue. It is also pertinent to mention that Revenue chose not to cross examine assessee‟s partner Mr Inderjit Singh Khokhar pursuant to retraction of the voluntarily disclosure of Rs. 1.2 crores made by the assessee . The Revenue has also chosen not to place on record report of vigilance and other enquiries initiated by it as directed by CBDT. N....
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....nating material against the assessee in our considered view does not warrant any addition as was made by the A.O. . The AO has referred to additions being made in the preceding years which the assessee has explained to be deleted by appellate authorities which has also remained un-rebutted by Revenue even before us and in any case merely because additions on some grounds in preceding years have been made does not warrant that the books of accounts have become unreliable for even the subsequent years as principles of res judicata are not applicable to income-tax proceedings as additions in every year is to be made on its own merits. There were additions made to the tune of Rs. 58 lacs on account of alleged discrepancies in the books apart from as is reflected in loose page 175 to the tune of Rs. 62 lacs as under : Sr.No Points on which disclosure was made. Amount . of . disclosure.(Rs.) 1. Cash receipts 62,00;000' 2. On account of purchases ~*.:*:20,00,000 3. On account of labour charges 8,00,000 4. On account of site expenses 3,67,000 5. On account of octroi & transportation 1,10,000 6. On account of wages & salaries ....
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....from the forced confessional statement which is involuntary in nature. The loose document impounded being page no 175 during survey operations is held by us to be dumb document which is alleged by the assessee to have been prepared at the time of survey itself at the behest of survey team to justify surrender of concealed income. The said statement as well material on record keeping in view the entire factual spectrum of the case does not inspire confidence to justify the additions as was made by the AO and in our considered view the learned CIT(A) has rightly appreciated the entire factual matrix of the case and deleted the additions vide his appellate order. The assessee has rightly relied upon the decision in the case of CIT v. Dhingra Metal Works in ITA no. 1111/2010 vide orders dated 04-10-2010. Search and Surveys conducted under the provisions of the 1961 Act is an serious infringement of Right to life and liberty of the person searched/surveyed as enshrined in Article 21 of the Constitution of India as it impinges on Right to Privacy and it cannot be carried out in a casual manner except through the procedures established by law which also entailed that there will be no use ....