TaxTMI 
TaxTMI 
TaxTMI 
2018 (1) TMI 333
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....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 may be necessary." 3. The assessee is an interior decorator undertaking c....
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....on 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filed with Revenue as the said statement was taken forcefully by Revenue from partner of the assessee and the same was retracted by the assessee.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 mainly relying upon page no. 175 which was loose paper impounded during the course of survey operations u/s 133A, which is placed in paper book at page no. 155, on the ground that the assessee has volun....
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....e 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:- Amount of disclosure (Rs) 1 Cash receipts 62,00,000 2 .On account of purchases 20,00,000 3 On account of labour charqes 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 waqes & salaries 12,....
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.... 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 another serious allegation, that the statement was written and prepared by the ACIT Circle 18(1) and the partner of the firm was not allowed to read the contents of the same and was forced, to sign the statement. The AO should have taken such allegations leveled seriously and cross examined the appellant for the allegations leveled. Once the retraction statement was made by the appellant alleging the threat and c....
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....ely 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, (2010) 231 ITR (Chattisgarh) 165 : (2010) 327 ITR 497 : (2010) 36 DTR 13, recently the Hon'ble High Court has held that "Addition on the basis of statement recorded during survey-Assessee surrendered the cash and value of excess stock found during survey for taxation but did not offer any such amount in his return-He produced his updated books of account and other primary records during the assessment proceedings to explain the cash and stock found at the t....
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....urther 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 statement without disclosing its content to him. Such categorical assertion made by the appellant appears to be correct looking into the fact that the appellant had brought the facts of the survey proceedings and incidents of their harassment to the knowledge of the higher authorities of the department including Central Board of Directs Taxes and had also filed the writ petition before the High Court of Bombay narrating the events and, irregularities committed by the authorized officer du....
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.... 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 concerned, it is a plain paper or a dumb document, showing some words not even figures written on it, without any corroborative evidence to show that these represent the money received in cash by the appellant. There is no further evidence regarding the names and addresses of the parties who have paid such amounts in cash and what is the nature of these transactions. In the absence of any such corroborative evidence placed on record by the AO, the addition made amounting to Rs. 62,00,000/- cannot be sustained and....
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....y) 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 documentary evidence or any impounded documents in the above statement which could, have led the, AO to conclude that the above income had not been disclosed by the appellant for the period under consideration. The AO has neither placed any evidence on record nor has referred to any impounded material in the assessment order before making the above additions to the income of the appellant for the period under consideration, The AO has not even discussed the different heads under which the additions are made in the, assessment order. What are the unaccounted purchases of Rs. 20,00,000/- and how this figure h....
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....ive 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 years will have no material effect on the proceedings for the year under consideration as the issues in both the years are different. Moreover, it has been informed by the AR of the appellant that the additions made for the AY. 2007-08 and 2008-09 have all been deleted by the appellate authorities subsequently, Therefore quoting the instances of additions made in the case of the appellant in the AY. 2007-08 and 2008-09 by the AO is an exercise in futile. 51. At para 5.4 the AO has made the observation that at page 5 of the impounded material is the account of Deccan Lime Depot, wherein a bill amounting to. Rs. 88....
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.... 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 the above party is Rs. 20,97,804/-. So, there is no discrepancies in the above amounts as pointed out by the AO." 5. Aggrieved by the appellate order dated 10-11-2014 passed by learned CIT(A), Revenue has come in an appeal before the tribunal. 6. The Ld. DR submitted that the assessee made disclosure of Rs. 1.2 crores during the course of survey operation u/s 133A of the Act, which was subsequently retracted by the assessee. Our attention was drawn to page no. 22 of the learned CIT-A orders wherein the detail of the surrender of income of Rs. 1.20 crore made by the assessee is placed . It was submitted that the statement was given by the assess....
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....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 from the assessee vide statement recorded of partner Sh. Inderjit Singh Khokhar on 19-09-2008. It was submitted that page 175 of impounded material was a loose document which is a dumb document and additions have been made without any evidence on record merely based on forced extraction of confession/admission of undisclosed income to the tune of Rs. 1.20 crores. It was submitted that there was some bills which were not entered into the books of accounts when survey took place on 19-09-2008 but it is not a ground for making additions otherwise there is no discrepancy in the books of accounts and whatever differences in the books of accounts as is re....
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....ue. 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 assessee. These facts were also brought by the assessee to the notice of the learned Chief Commissioner of Income Tax-X,Mumbai and Commissioner of Income Tax-18, Mumbai immediately after the conclusion of survey on 19/20-09-2008, vide advocate letter dated 29-09-2008 as well retraction letter filed on 16-10-2008 . The assessee also filed Writ Petition with Hon‟ble Bombay High Court on 5-12- 2008 which was later withdrawn by the assessee in view of the CBDT assuring necessary justice to the assessee. The Hon‟ble Bombay High Court gave liberty to the assessee to raise all contentions during assessment proceedings to explain entries in the account books . It is pertinent to mention that the assessee ....
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....se 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 against survey party and the manner in which survey operations were conducted and it is claimed that assessee was threatened and coerced to give forced statement and to surrender income of Rs. 1.20 crore as well to prepare documents reflecting concealed income to the tune of Rs. 62 lacs vide impounded page no 175 which is placed at paper book 155 . We have also carefully gone through the impounded document marked at page 175 . The said document has following written on it, as under : "Seven K-05/4 Five K-01/5 Eleven-K-5/6 Two K-18/06 Twelve K-15/7 Ten K-12/08 Fifteen K-17/08" There is no further evidence regarding the names and addresses of the parties in the said impounded documents and als....
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....rities 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. Now under these circumstances, we have to see whether there is sufficient incriminating material on record to justify additions as were made by the AO . The statement of the partner of the assessee Mr Inderjit Singh Khokar recorded on 19-09-2008 stood retracted by the assessee within 10 days from the date of survey as detailed above . CBDT vide its instruction F.No.286/2/2003-IT(Inv) dated 10-03-2003 had directed its officers to focus on collection of incriminating material / evidences during the search and survey operations which could lead to detection of undisclosed income rather than focussing on confession of undisclosed income, as under:- "Instances have come to the notice of the Board where assessees have claimed that they have been forced to confe....
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....ge 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 12,77,000 7. On account of travelling & conveyance 46,000 8 On account of capital introduced by partners 12,00,000 Total disclosure 1,20,00,000 With Respect to the aforesaid additions to the tune of Rs. 58 lacs, there is no whisper in the assessment order as to how these additions are being made in context of the books of accounts by referring to any incriminating material impounded during the survey or even otherwise apart from merely relying on the statement of Mr Inderjit Singh Khokhar which stood retracted. No doubt the statement recorded during the survey is relevant and useful during assessment proceedings for making additions but it raises rebuttable presumption . It is always open for the assessee to rebut the same by bringing on record necessary corroboratory evidences including ci....
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.... 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 of coercion, fraud, threat or force during the course of these proceedings in obtaining confessions as well incriminating material to prejudice the persons searched/survey. What is relevant under these circumstances is to see whether the additions can be made independent of the retracted statement based on incriminating material on record and if it is so possible then there is no need to rely on the retracted statement. The said statement can be used as an aid for making additions based on incriminating material on record and if the additions can be independently sustained based on incriminating material on record, then there is no need to call for the forced confessional statement in aid which stood retracted . The decision of the Hon‟ble Supreme Court in the case of Kashmira Singh v. State of Madhya Pradesh reported in 1....