TaxTMI 
TaxTMI 
2017 (9) TMI 1708
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....so by a letter dated 22.12.2009, and specific finding has been recorded by the CIT(A) in paras 4 and 5 respectively of his order? 2. Whether on the facts and in the circumstances of the case and in law, the ITAT is right in holding that interest u/s 234A&234B of the IT Act should be counted from the date when the last copies of the documents seized during the course of search were available to the assessee?" 3. Counsel for the appellant Mr. Mehta has taken us to the order of AO and contended that while considering the case of assessee the Assesseeing Officer has taken into consideration the statement recorded by the competent authority and thereafter considering the unexplained stock and immovable property has assessed the income as under:- "Addition on account of unexplained investment in stock and immovable property: The assessee made a surrender of Rs. 1,02,25,168/- as per his letter dated 22.12.2009 filed on 22.12.2009. "kindly refer to the assessment proceedings in progress in the case of captioned assessee. Without prejudice tothe submissions made earlier and the material available on record the following facts are submitted for your kin....
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....) (APB 51) and its reply dated 24.12.2009 (APB 1-50). Further the confirmation and other details as desired by the ld. AO vide letters dated 18.12.2009 (APB-86) were submitted vide letter dated 22.12.2009 (APB 61-83). The main allegation of the Ld. AO regarding the non acceptance of stock details submitted for the prriod from 01.04.2007 to 10.01.2008 was that the stock items as per assessee's working sheet are 781 and as per stock sheet prepared by the Income Tax Department during the course of search are '1402' however, the quantity submitted by the assessee was not properly appreciated by the Ld. AO who making total of the S.No. The actual quantity as submitted by the assessee and as quantify by the department during the course of survey are as under: As per Assessee: S.No. Name of the firm No. of items Total value of stock 1. Shyam Moorti Emporium 272 143655 0.00 2. Shyam Exports 402 536455 0.00 3. Shyam Moorti Kala 688 242980 0.00 4. Shyam Moorti Museum 484 367658. 00 5. Shyam Moorti Palace 390 245133 5.00 Total 2239 120498 93.00 I have considered the submiss....
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....me of Rs. 16,60,610/- without including the investment in excess stock surrendered during the search." 5. He contended that the view taken by the tribunal is contrary to law and required to be reversed more particularly when the tribunal has reversed the finding without assigning any reason. It is contended that the Tribunal while considering the same has not adverted to the argument advanced by D.R. and allowed the appeal in favour of the assessee. 6. Counsel for the respondent Mr. Gupta has taken us to the observations made by the A.O. which reads as under:- "In view of the non-compliance and non-cooperative attitude of the assessee a proposal for launching of prosecution proceedings u/s276 CC of the Act was sent on 11.11.2009 to the CIT, Central, Jaipur." 7. In view of non-compliance therefore, the notice which was sent on 11.11.2009 the assessee has compelled to surrender himself and therefore, he has surrendered. However, he has produced all documents which are now produced today before this court and also taking into consideration the statement which are recorded and the material which are available on record, the Tribunal has held as under:- 2.6 Pe....
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....(1973) 91 ITR 18 (SC), has held that an admission in a statement recorded on oath is an extremely important piece of evidence but it cannot be said that it is conclusive and it is always open to the person who made the admission to show that it is incorrect. In the present case the assessee though had accepted the excess stock in the statements recorded u/s 132(4) of the Act at the time of search however while filing the return of income he did not include that amount in the income declared which by itself is a retraction to the statements and when during the course of assessment proceedings he was once again compelled by the assessing authority then a conditional offer was made where he offered the additional income on account of excess stock to purchase the peace of mind with a further condition that penalty should not be levied on such additional income and the AO did not accept his offer, the assessee on the next very day, submitted the necessary reconciliation and other relevant details alongwith the books of accounts to the AO for verification and claimed that there was no discrepancy in the stock as at the time of search the books of accounts were incomplete and after comple....
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....zed and was valued at Rs. 1,17,30,918/- in terms of the Inventory Sheets prepared (APB 148 to 236). Since the assessee's regular books of accounts were incomplete at the time of search, on the basis of such incomplete books of accounts the stock as per books was taken at Rs. 25,86,800/- and accordingly the excess stock of Rs. 91,44,118/- (being 1,17,30,918 - 25,86,800) was worked out by the department. Besides, this certain other entries of unexplained investment in the acquisition of property at Axis Mall for Rs. 28,76,050/- was also found and was admitted by assessee. However, in the return of income filed assessee has admitted and disclosed additional income of Rs. 10,30,000/- in addition to Rs. 3,10,000/- declared in A.Y. 2005-06, Rs. 4,55,000/- declared in A.Y. 2007-08 being the investment made in the acquisition of the property at Axis Mall and had not declared any additional income on account of the alleged excess stock admitted during the course of search. During the course of assessment proceedings it was contended that the books of accounts were incomplete at the time of search and thereafter the same were completed on the basis of the purchase and sales....
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....sessee. The Ld. AO had made assessment by accepting part offer of the assessee which is favorable to him and rejected the conditions attached to it thus assessment cannot be held as an agreed assessment more particularly when it was not consistent with all the terms and conditions of the offer made by the assessee, therefore the assessee preferred appeal before the competent authority i.e. the Ld. CIT(A), Central, Jaipur who summarily rejected the appeal of the assessee by making various observations at pages 14 to 19 of his order which are summarized as under: 1. In the statement recorded u/s 132(4) during the course of search the assessee has accepted excess stock of Rs. 1,17,30,918/- in reply to question no. 25 of his statement. 2. The appellant failed to furnish the books of accounts and more particularly purchase vouchers before the AO. The appellant in presence of his AR's filed letter of surrender dated 22.12.2009 and offered Rs. 1,02,25,168/- for tax. 3. It is a clear cut case where the excess stock was not only found but surrendered during the course of search and later on the appellant tried his best to escape from the tax liability. 4.....
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....one in the present case. Reply to question No. 6, 7, 24 and 25 (APB 10-23) should be read together before drawing any conclusion.........- (APB-13).... (APB-22).... From the perusal of the statements it is clear that at the time of search the books of account maintained by the assessee were incomplete on the basis of which the stock inventory as per books of accounts were taken by the department. Assessee during the course of assessment proceedings has submitted the complete list of inventory alongwith the details of purchases etc. so as to prove that the stock available is duly recorded in the books of accounts (APB 31 to 79). It is an established law that confession cannot be made foundation of the assessment and the Hon'ble Supreme Court in the case of Pullangode Rubber Products Co . Ltd. V/s State of Kerala reported in 91 ITR 18 has held that if the person making the confessional statement has rebutted the same with evidences such confession could not be made basis for making the additions, therefore the statements given by the assessee cannot be made sole basis for making a huge addition. 2. That with regard to failure to furnish bo....
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.... page 4 of the order that the stock items as per assessee's working sheet are 781 and as per stock sheet prepared by the Income Tax Department during the course of search are '1402'. While observing so, the Ld. AO has made a serious error of counting the quantity found during search at "1402" by making total of the S.No. mentioned and not counted the quantity mentioned in each single S.No. The actual quantity as submitted by the assessee and as quantify by the department during the course of search are as under: As per Assessee: S.No. Name of the firm No. of items Total value of stock APB 1. Shyam Moorti Emporium 275 1436550.00 31-34 2. Shyam Exports 402 5364550.00 39-43 3. Shyam Moorti Kala 688 2429800.00 49-54 4. Shyam Moorti Museum 484 367658.00 64-65 5. Shyam Moorti Palace 390 2451335.00 66-72 Total 2239 1204989 3.00 As per Income Tax Department: S.No. Name of the firm No. of items APB 1. SFA 626 148-170 2. SFB 344 187-194 3. SFC 220 201-206 4. SFD 251 211-218 5. A ....
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....y assessee was also not doubted by the Ld. AO. Further neither Ld. CIT(A) nor Ld. AO gives specific comment on the reasons of difference of stock of 781 counted by the assessee and 1402 counted by the revenue as pointed out by the assessee. Further, from perusal of stock details (APB 31-79) it is clear that quantity of stock declared by the assessee is more than that physically counted by the search team. The books of accounts maintained by the group were not completed at the time of search and after duly incorporation all the financial affairs and taking into account all the entries the stock counted was excess. It is an established law that the assessee should be given an opportunity to complete the books of accounts found incomplete at the time of search. It is thus submitted that the stock declared by the assessee deserves to be accepted and observation of Ld. CIT(A) regarding nonmaintenance of stock details deserves to be ignored. With the above back-ground, it is submitted that the no stock was found as in excess and the admission of the assessee being made with stipulation of no penalty proceedings be initiated was not accepted by the department in toto and except t....
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.... books of accounts tendered by the assessee were also not doubted nor any adverse material have been brought on record to hold that the details submitted by the assessee were incorrect. From the perusal of the inventory sheet prepared by the assessee, we further find that such sheets contained cross reference of the quantity found and inventoried by the search party therefore, it can be safely inferred that the stock found during the course of search stood considered in the stock inventory available with the proprietary concern of assessee group as on the date of search. Thus in these circumstances, the sustained addition of Rs. 91,44,118/- is directed to be deleted. Accordingly the impugned addition on merit is also not sustainable. Thus the ground Nos. 1 to 3 of the assessee are allowed. 3.2 Briefly stated, the facts giving rise to this ground are that during the course of search a loose paper was found containing certain jottings of cash payments made towards the purchase of a commercial shop in Axis Mall, Jaipur. In the statements recorded during the course of search the assessee admitted that he alongwith his family members have purchased shop No. 6 in Axis Mall, Jaip....
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....IT(A) observation in para 5.1 page 19 of his order that, - As already mentioned, the appellant has himself surrendered undisclosed investment in Axis mall being 50% of his share amounting to Rs. 28,76,050/- in his letter dated 22.12.2009. Moreover, the other 50% owner Sh. Shankar Lal Pandey in his statement recorded u/s 132(4) has admitted 50% amount of his share being Rs. 28,76,050/- has been paid by him from undisclosed sources and the same was offered for taxation by him. Morever same is supported by seized document at page 2 of Ann. A-1, seized from 1994, Khejaron Ka Rasta. Accordingly this addition included in total addition of Rs. 1,03,44,198/- is also sustained and this ground is also rejected., is totally devoid from the fact of the case. As submitted in grounds of appeal No. 1 to 3 above, the offer was based on the figures informed to the assessee and ultimately not binding on the assessee. Moreover assessee himself has accepted Rs. 15,00,000/- as undisclosed income and surrendered Rs. 17,95,000/- in his return i.e. more than what surrendered. Further copy of statement of Sh. Shankar Lal Pandey was not made available to the assessee, which has been made as basis of 50% add....