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2018 (5) TMI 1629
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....n of Rs. 54,220/- made by the AO in the appellant's income on allegation of unexplained investment in stock, solely on the basis of statement of the appellant recorded during the course of survey u/s. 133A of the Act, without considering and appreciating the explanation with evidences offered by the appellant. . 3. That, the learned CIT(A) grossly erred, both on facts and in law, in confirming the addition of Rs. 5066/- made by the AO in the appellant's income by estimating the total sales of the appellant, for the year under consideration, at Rs. 10,11,317/- as against the same shown by the appellant at Rs. 9,10,000/-. 4. That, the learned CIT(A) grossly erred in confirming the addition of Rs. 5,53,501/- made by the AO in the appellant's income merely on the basis of statement of the appellant recorded during the course of survey u/s. 133A of the Act, without considering and appreciating the explanation with evidences offered by the appellant during the course of assessment proceedings. 5. That the learned CIT(A) grossly erred in confirming the additions of Rs. 32,484/- and Rs. 81,950/- made by the AO in the appellant's income respectivel....
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....rn of Income for A.Y. 2004-05, the appellant had also furnished his statement of affairs as of 31-03-2004 as also a statement showing accumulation of his capital up till 31-03-2003. A copy of acknowledgement of Return, Computation of Income, Statement of Affairs and Statement showing Accumulation of Capital, as filed by the appellant along with his Return for A.Y. 2004-05 are being submitted herewith as Annexure A-1.01 & A-1.02 [Paper Book Page No. 13 to 18]. The Return of Income filed by the appellant for A.Y. 2004-05 was duly accepted by the learned A.O. A survey under section 133A of the Income-Tax Act, 1961 was carried on in the business premises of the appellant on 03-03-2005 by the Income-Tax Officer, Ward-2, Ratlam. During the course of survey, certain books, documents and loose papers were found and the same were impounded by the survey party. Xerox copy of the inventory of books and other documents found during the course of survey is being submitted herewith. Besides, an inventory of stock and cash balance lying with the appellant were also prepared. Copy of list of stock and inventory of cash are being submitted herewith. Further, during the course of s....
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....ses of Mahua 66,968 TOTAL ADDITIONS 9,68,285 No addition is called for in view of the facts and circumstances of the case and following submissions: SUBMISSIONS Ground No. 1 "That determination of Total Income at Rs. 10,50,590/- as against the Returned Income of Rs. 82,300/- by making addition of Rs. 9,68,285/- is quite unjustified, unwarranted, arbitrary, excessive and bad-in-law." Ground No. 2 "That, the learned assessing officer grossly erred in making the addition of Rs. 77,845/- in the appellant's income by alleging unexplained cash, solely on the basis of statement of the appellant recorded during the course of survey u/s. 133A of the Act, without considering the explanation with evidences offered by the appellant, during the course of assessment proceedings." In this context, it is submitted as under: 2.01 That, during the course of the survey, carried on in the business premises of the appellant 03-03-2005, total cash of Rs. 77,845/- was found. 2.02 That, the appellant was carrying on retail trade of kirana and cosmetic items at a very petty scale. The total tur....
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....0/- from his business. Such set apart was made by the appellant for the purpose of savings only. 2.07 That, the learned AO did not dispute withdrawal of cash by the appellant from his savings bank account. He also did not claim that the amount of Rs. 80,000/- set apart by the appellant from his business was utilized by the appellant for any other purpose before the date of survey. The learned AO did not accept the contention of the appellant that the cash found during the course of survey was out of his past savings. The learned AO, mainly on the basis of the statement given by the appellant during the course of survey proceedings, made the impugned addition. 2.08 Before commenting upon the action of the learned AO in making the impugned addition solely on the basis of the statement, it is submitted that the appellant had been carrying on retail business of kirana since November'2001. He had obtained a license from the competent authority of the concerning Municipal Corporation for carrying on the said business in October'2002. A copy of the license obtained by the appellant was duly submitted before the learned AO during the course of assessment ....
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....nly under s. 132(4) of the IT Act in the course of any search or seizure. Thus, the IT Act, whenever it thought fit and necessary to confer such power to examine a person on oath, the same has been expressly provided whereas s. 133A does not empower any ITO to examine any person on oath. Thus, in contra-distinction to the power under s. 133A, s. 132(4) of the Act enables the authorized 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 authorized 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." 2.10 Your Honour, at the cost of repetition, it is submitted that the appellant is an under educated villager, residing in a tribal area, with very little k....
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....osed income during the course of search and seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, on confessions during the course of search and seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely Ashok Vani, Jobat, Distt. Jhabua -: 26 :- to be disclosed before the IT Department. Similarly, while recording statement during the course of search and seizure and survey operations no attempt should be made to obtain confession as to the undisclosed 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." Reliance is also placed on following judicial authorities: i) Kailashben Maneherlal Choksi vs. CIT (2008) 220 CTR....
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....oluntarily or it was given under a confused state of mind without properly perceiving the situation. By any stretch of imagination, it cannot be presumed that entire investment in stock was made by the appellant during the relevant previous year only and at the commencement of the relevant previous year, the appellant was having zero inventory. Any retail kirana trader who is required to sale more than 150 items of kirana and cosmetic goods is required to maintain bare minimum stock of worth of Rs. 50,000/- to Rs. 1,00,000/- at all the times. Since, the appellant was carrying on this business since November'2001 and therefore, it cannot be presumed that as on 01-04-2004 being the first day of the relevant previous year, the appellant was having Nil stock. Such a crucial fact posses a big question mark upon the evidentiary value of the reply extracted by the survey party from the appellant. 3.05 That, the learned Assessing Officer grossly erred in making the impugned addition without accepting the explanation of the appellant. The appellant had explained that the stock found during the course of survey was the normal stock of his retail trade and the same was built-up o....
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....ct, 1961 and therefore the addition of Rs. 96,251/- by alleging unrecorded purchases was not warranted." In this context, it is submitted that since the appellant was neither required nor he actually maintained regular books of account in his ordinary course of retail business of kirana and therefore due to computational error he had estimated his turnover for the relevant previous year at Rs. 9,10,000/- only as against the same estimated by the learned AO at Rs. 10,11,317/-. Since, the learned AO had already made a separate addition of Rs. 5,066/- on account of gross profit on additional sales of Rs. 1,01,317/- [Rs.10,11,317 - Rs. 9,10,000] @ 5% there was no justification for making any further addition on this count. The learned Assessing Officer besides making addition of Rs. 5,066/- under the head additional gross profit, further made addition of balance amount of Rs. 96,251/- [Rs.1,01,317 - Rs. 5,066] as unexplained purchase. Thus, the learned AO made entire addition of enhanced estimation of sales of Rs. 1,01,317/- under two different heads. He grossly erred in not considering the material fact that the very source of purchase of Rs. 96,251/- was from the sales proce....
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.... on account of such loose papers/documents. 4.02 That, xerox copy of all the books and loose papers, as referred to in the above said inventory, are Ashok Vani, Jobat, Distt. Jhabua -: 39 :- being produced herewith for kind perusal and record of Your Honour. 4.03 That, during the course of assessment proceedings, the appellant was required to explain that description and nature of books/documents/loose papers impounded during the course of survey. The appellant vide his counsel's letter dated 17-10- 2007 made the necessary explanation by submitting a separate statement. A copy of such statement is being submitted for kind perusal. 4.04 That, during the course of assessment proceedings, the learned AO had verified each and every book/document/loose paper qua the explanation given by the appellant in the above referred statement. The learned AO upon the detailed verification could allege only two discrepancies viz. (i) the total sales as per Annexure A/4, A/5 and A/7 was to the extent of Rs. 9,27,041/- for a period of 11 months as against total estimation of sales made by the appellant at Rs. 9,10,000/- for the entire period of 12 months, (ii) the appel....
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....n the basis of statement of the appellant recorded during the course of survey u/s. 133A of the Act, without considering the explanation with evidences offered by the appellant, during the course of assessment proceedings." In this context, it is submitted as under: 5.01 At the outset, kind attention of Your Honour is invited to the statement of the appellant recorded during the course of survey. On a perusal of such statement, it shall be observed by Your Honour that the appellant was never confronted with the issues relating to the cash debtors and kirana debtors as alleged by the learned AO in the body of the Assessment Order. It shall be observed by Your Honour that the appellant was confronted on the issue of cash, stock and loose papers only but he was not asked any single question in respect of cash debtors and kirana debtors. It shall be observed by Your Honour that the words 'Nagdi- Udhari' [Cash Debtors] and 'Kirana-Udhari' [Kirana Debtors] could find place in the entire body of the statement in the concluding para No. 12 only. On a careful reading of answer to Q. No. 12, it shall be observed by Your Honour that the words 'Nagdi-Udhar....