TaxTMI 
TaxTMI 
2019 (6) TMI 916
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....lso carried out at some of the business premises of the Shreeji Sulz Pvt. Ltd., Shreeji Textiles Pvt. Ltd. and Puja Spintex Pvt. Ltd. During the course of search, statements of the assessee and his family members were recorded, which has been claimed by the assessee taken under duress and the same were subsequently retracted by him. The return of income was filed on 29.09.2013 declaring income of Rs. 18,00,000/-. The assessment u/s 153A/153B r.w.s. 143(3) was completed on 12/05/2014 at total income of Rs. 1,25,66,304/-. During the course of assessment, the A.O. made addition of Rs. 1,07,66,304/- on account of alleged excess stock accepted by the assessee. 3. By the impugned order, the ld. CIT(A), deleted the addition of Rs. 87,93,007.44 and upheld the addition of Rs. 19,73,296.56 after having a following observation: "3.3 I have gone through submission of the A/R and the record for the appeal. 3.3.1 The main crux of submission of the A/R is that there were not found any incriminating or credible evidence relating to any undisclosed income/activities during the search operations, therefore, the authorities have not followed the instructions of the CBDT and accordingly th....
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.... is due to mala fide reasons or based on extraneous factors or mere rumors. It would be sufficient if there were certain materials, which could have prompted a prudent man to arrive at such a conclusion." The observations of the Hon'ble Madras High Court are applicable to the facts of the case of the appellant. Therefore, in absence of any evidence on record to the effect that the satisfaction of the authority before issuing the warrant of authorization was not proper or incorrect or was based on extraneous factors, this ground or appeal is dismissed. 4 Ground No. 1 and 3 are regarding the validity of assessment order and verifiability of the statement recorded u/s 132(4) of the Act, which has been relied upon by the Ld. AO for making additions to total income and which has been retracted by the assessee in post search proceedings. The main contentions raised by the appellant in this ground is relating to determination of the issue whether the Ld. AO was justified in making assessment only on the basis of the statement of Sh. Navneet Somani recorded u/s 132(4) of the Act. The said grounds of appeal are reproduced as under: GROUND NO.1 Under t....
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....ntal breakdown of any normal person. 4.1.2 Under these circumstances, the declaration made by Sh. Navneet u/s 131 of the Act cannot be said to be voluntary and cannot be the sole ground to make the addition. Further, it is clarified that no declaration pertaining to the impugned addition was made by Sh. Navneet in his statement recorded u/s 132(4) of the Act at the time of search. Thus, the Ld. AO has erred in facts by relying upon the evidentiary value of statement recorded u/s 132(4) of the Act in the impugned assessment order. 4.1.3 The declaration made by the Sh. Navneet Somani u/s 131 of the Act in the case of the Appellant cannot be relied upon as the Appellant by submitting the necessary documentary evidences on record has rebutted the said statement. Thus, the statement though made by the Managing Director of the Appellant Company, remains orphan and unfair on the part of the Ld. AO to thrust it upon the Appellant while performing his quasi-judicial function of determining the true income. 4.1.4 In view of the above factual and legal position, the additions in question in the relevant assessment year are not corresponding to the actual position in....
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....ication in our case. 4.1.6 In view of the above, the impugned assessment order determining the total income at Rs. 1,25,66,304/- is perverse, arbitrary, bad in law. 4.1.7 Under the facts and circumstances of the case and in law, Ld. AO has erred in passing impugned assessment order: a. in the absence of any incriminating material found during the course of search 4.1.8 As stated earlier, during the course of search proceedings, no incriminating material was found by the respective income tax authorities. The search operations did not resulted in discovery of any incriminating material or any undisclosed source of income. The edifice of additions in the case of the Appellant is only disclosure made u/s 131 of the Act which was by and large extracted out from the Appellant by creating hostile and difficult conditions, some assumptions and presumptions. It is clearly evident from the impugned assessment order that the income tax authorities did not unearth any incriminating material or undisclosed income during the course of search operations. 4.1.9 It is evident from impugned assessment order itself that no incriminating documents/papers w....
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....sive; and it is open to the person who made the admission to show that it is incorrect." PAUL MATHEWS AND SONS V. CIT [2003J 263 ITR 101 (KERALA): "We find that such a power to examine a person on oath is specifically conferred on the authorized officer only under section 132(4) of the Income-tax Act in the course of any search or seizure. Thus, the Income-tax Act, whenever it thought fit and necessary to confer such power to examine a person on oath, the same has been expressly provided whereas section 133A does not empower any Income-tax Officer to examine any person on oath. Thus, in contradistinction to the power under section 133A, section 132(4) of the Income-tax 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 Income-tax Act. On the other hand, whatever statement is recorded under section 133A of the Income-tax Act it is not given any evidentiary value obviously for the reason that the officer is not authorized to administer oath and to take any sworn statement which alone has evidentiary value as contemplated under law. Therefore, the statement elicit....
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....ts and evidences by the Appellant. The declaration made by Sh. Navneet u/s 131 of the Act was incorrect and should not be relied upon. Further, the Ld. AO didn't make any further enquiry/adverse inference/comments on the documents placed by the Appellant on record and simply, brushed aside such supporting evidences on record whereas it is an undisputed fact that documentary evidences produced by Appellant had been found duly verifiable. Thus, the Ld. AO acted against the principles of natural justice by not considering the explanation/submission of the Appellant without assigning/providing any substantial reasoning or evidence in support. 4.1.15 It is to be also appreciated that evidences filed by the Appellant has not been disapproved/rejected by giving any specific reasons/contrary evidence. The only reasons for not accepting the explanation of the Appellant is blind acceptance of the statement recorded u/s 131 of the Act of Mr. Navneet. Rather it is evident from the record, that Ld. AO was satisfied with sufficiency and veracity of the documentary evidences placed by the Appellant as no discrepancy has been found/noted in the impugned assessment order regarding the ....
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....ent order on 02.06.2014. (b) The AO took cognizance of the disclosure u/s 132(4) by Shri Navneet Somani during the search on 26.09.2012 and issued show cause notice u/s 142(1) dated 03.01.2014 as well as order sheet noting dated 21.01.2014 and the response there by the appellant vide his submission on 06.05.2014/19.03.2014 which refers an affidavit by Shri Navneet Somani retracting the disclosure. (c) The AO cited certain case laws which are perceived to be supporting his case to make the addition based on the disclosure -u/s 132(4) by the appellant. Therefore, for the contention of the appellant that no adequate opportunity was granted, I do not accept the submission of the AR as ample opportunities have been granted to the Appellant during the course of assessment proceeding. The appellant has also filed its submissions during assessment proceedings. In the above process adopted by the AO, I do not find any perversity of fact of omission of law or violation of natural justice. Just because the decision of the AO is not acceptable to the appellant it does not make the assessment order as perverse, arbitrary, bad in law. At the most it can be said debatab....
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.... stock was found during the search investigation. Further, statement u/s 132(4) of the Managing Director of the Appellant Company i.e., Mr. Navneet Somani was recorded at midnight wherein undue mental pressure was mounted on him to declare unaccounted income of Rs. 1,00,00,000/, Sh. Navneet Somani was made to declare undisclosed income on account of alleged excess stock in another Group Company i.e., Shreeji Textiles Pvt. Ltd. The relevant portion of the statement of Navneet Somani recorded u/s 132(4) of the Act is reproduced herein below for reference purpose: 5.2.2 It is clearly evident from the above and full statement recorded u/s 132(4) of the Act of Sh. Navneet Somani enclosed at Pg No. 55-62 of PB that no declaration, disclosure, admission, surrender or whatsoever was made on account of alleged excess stock in the hands of the Appellant Company. Whatever was stated by Sh. Navneet was only pertaining to Shreeji Textiles Private Limited and not to the Appellant Company. The statement u/s 132(4) of the Act does not contains any declaration of income in the hands of the Appellant. However, the Ld. AO has grossly erred in facts and in law by relying upon the statement re....
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....finished stock is valued. e. During the course of search proceedings, the income tax authorities prepared the calculation sheets for the physical stock as found at the time of search/survey but no excess stock was found at the time of survey. However, later for comparison purpose the authorities has taken arbitrary calculations/basis to determine stock as per books of accounts of the Appellant. The said basis of calculations of book stock is not supported with any evidence/document found during the course of search/survey. Therefore, the very basis of calculating the alleged excess stock is arbitrary and without any evidences. 5.2.5 Therefore, in view of the aforesaid table and submissions, it is evident that the Appellant has duly explained the position of stock as per its books during the course of assessment proceedings and there was no excess stock in its hands as alleged by the Ld. AO. Thus, the impugned addition of Rs. 1,07,66,304/- on account of alleged excess stock deserves to be deleted. 5.2.6 Without prejudice to the above, the submissions regarding the findings and allegations of the Ld. AO are made herein below: a. Some discrepancies ....
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....s overriding of effect over subsequent retraction. h. The subsequent retraction from the surrender without having evidences in proof of retraction is not permissible in the eyes of law. It is pertinent to mention that the aforesaid findings and allegations of the Ld. AO from point no. (c) to (h) are pertaining to admission and retraction of the statement recorded u/s 132(4) of the Act. However, in the present case, no declaration was made by Sh. Navneet Somani u/s 132(4) of the Act for the purpose of impugned addition on account of alleged excess stock in the hands of the Appellant. Hence, the aforesaid allegations of the Ld. AO are incorrect as per the facts of the case and cannot be relied upon. i. The submission of the assessee is perused and considered and the same is not acceptable for the reasons that the stock was taken in the presence of employees of the assessee company. During the course of assessment proceedings, affidavits of employees of the Appellant Company were submitted which are enclosed at Pg No. 166-169 of PB. In the said affidavits, the employees have clearly stated the following: i. That Mr. Navneet Somani, Director....
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.... alleged excess stock was made u/s 132(4) of the Act. iii. Declaration u/s 131 of the Act was rebutted by filing documents, evidences and explanations. 5.2.7 Further, the judicial pronouncements relied upon by the Ld. AO have been dealt with in submissions made in Para .No. 1.6 above. 5.2.8 Thus, in view of the above facts & circumstances of the case and the detailed submissions in this regard, the impugned addition of Rs. 1,07,66,304/- deserves to be deleted. 5.3 I have considered the content of the assessment order, the submissions made by the appellant along with the material placed on record. 5.3.1 It is undisputed fact that Shri Navneet Somani himself in his statement recorded u/s 132(4) of the Act has made disclosure of income of Rs. 1 Crore under various heads. However, it is also undisputed fact that statement of the appellant was recorded in mid night and it was only general question put before him by the search parties. The relevant question no. 47 is reproduced as under:- 5.3.2 Obviously, the said question was asked at the time of conclusion of the search proceedings and there is no evidence/documents being referred a....
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....304/-and very timing of the declaration of the appellant makes it susceptible to perception that it might have been taken under duress. 5.3.11 In view of the aforesaid facts and circumstances, it is important to decide the issue on the basis of documentary evidences put forth by the appellant to counter the impugned addition. The AO has made the addition in respect of three items of the stock as under: S.N. Items Physical Quantity Quantity as per Books Alleged Difference Rate Amount 1. Grey Fabric (in Meters) 79,116.93 68,319.70 10,797.20 37.60 4,05,974.72 2. Finished fabrics (in Meters) 1,26,445.00 1,24,721.10 1,723.90 65.77 1,13,380.90 3. Yarn(in Kgs.) 1,69,037.29 1,10,706.61 58,330.67 175.67 1,02,46,949.32 Impugned addition on account of alleged excess stock 1,07,66,304.94 5.3.12 As regards the addition of Grey Fabrics of 10,797.20 Meters valued @ Rs. 37.60 amounting to Rs. 4,05,974.72/-, it is seen that substantial difference is on account of non-posting of grey folding data entries in the computer for the period 24.09.201....
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....antity of waste found during the course of survey. In absence of satisfactory explanation, the AO is directed to tax the unexplained excess stock of finished goods Yarn 11182.31 Kgs @ Rs. 175.67amounting to Rs. 19,64,396.40/-. 5.3.17 In view of the above facts and circumstances, this addition of Rs. 1,07,66,304/- is partly confirmed to the extent of Rs. 3,237.36, Rs. 5,662.80 & Rs. 19,64,396.40 and remaining amount of addition of Rs. 1,07,66,304/- made by the AO partly deleted to the extent of Rs. 87,93,007.44 as discussed & quantified in para 5.3.14 to 5.3.16 above. 5.3.18 Before parting, it must be mentioned that the A/R has relied upon the various judgment to support its contention that statement recorded u/s 132(4) is only a piece of evidence which is rebuttable. For this he has placed reliance on various judgments. It is held that the case of the appellant is substantially covered, to the extent of excess stock is explained with plausible documents, by settled law on admission and retraction by ratios of following judgments in cases of: PULLANGODE RUBBER PRODUCE CO. LTD. V. STATE OF KERALA [1973] 91 ITR 18 (SC): " C.I.T. V. BHANWARLAL 225 ITR 870 (RA....
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....Rs. 1,07,66,304/-made by the AO on account of excess stock surrendered by the assessee without appreciating the facts that when the assessee has itself worked out quantity and valuation of stock found during the course of search and post search proceedings and accepted the excess stock of Rs. 1,07,66,304/- as assessee's income in the statement recorded u/s 131 of the Act, assessee should have disclosed the same in the return but the same was not done by the assessee. The appellant crave, leave or reserving the right to amend modify, alter add or forego any ground (s) of appeal at any time before or during the hearing of this appeal." 7. We have heard the rival contentions and carefully gone through the orders of the authorities below. We have considered the detailed arguments of the ld AR on the legal issues raised by him as well as merit of the additions so made. We have also considered the detailed written submissions filed by the ld DR with respect to legal issues so raised with supports of the various judicial pronouncements of the Coordinate Bench. From the record we found that there was a search at assessee's premises. During the course of search, disclosure a....
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.... addition to the extent of Rs. 82,82,552.60. The ld. CIT(A) has observed that the department has taken incorrect value of yarn purchase for the month of July 2012, the said explanation of the assessee was found correct & supported with documents and substantially explain the excess stock to the extent of 47148.36 Kg. After giving effect of the correct value of yarn purchase for the month of July 2012. There is no infirmity in this part of finding of the ld. CIT(A), accordingly, we uphold action of the ld. CIT(A) to the extent of deleting the addition of Rs. 87,93,007.44 under the head yarn. 11. We found that in the stock of yarn, the assessee has included yarn of 11182.31 KG which was actually waste and found during the course of survey. However, the department has valued it as stock of fresh yarn. Accordingly, we do not find any justification in upholding the addition of 11182.31 KG of yarn amounting to Rs. 19,64,396.40. Accordingly, we do not find any merit in the action of the ld. CIT(A) for upholding this addition of Rs. 19,64,396.40. We direct the A.O. to delete the entire addition of Rs. 1,02,46,949.32 made under the head of Yarn. 12. As we have already decided the meri....
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....तà¥à¤¤ किये हà¥à¤ समसà¥à¤¤ दसà¥à¤¤à¤¾à¤µà¥‡à¤œà¥‹à¤‚ कां जांचने के पशà¥à¤šà¤¾à¤¤ उपरोकà¥à¤¤ अतिरिकà¥à¤¤ सà¥à¤Ÿà¥‰à¤• के बारे फिनिशà¥à¤¡ कपजा à¤à¤‚व यारà¥à¤¨ अतिरिकà¥à¤¤ आया है उसके लिठहमारी कमà¥à¤ªà¤¨à¥€ आयकर अधिनियम 1901 के तहत नियमानà¥à¤¸à¤¾à¤° बनने वाले कर को अपन बालू वितà¥à¤¤ वरà¥à¤· की अघोषित आय à....
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....¤°à¥‡ अघोषित आय है। इस पà¥à¤°à¤•à¤¾à¤° चालू वित वरà¥à¤¶ में कà¥à¤² अघोशित आय बिल पà¥à¤°à¤•à¤¾à¤° से जिस पर में नियमानà¥à¤¸à¤¾à¤° आग कर देने के देने के लिठतैयार हूà¤à¥¤ 1 Excess Stock of Cloth 2 Excess Stock of Yarn - 5000 Mtr. 25000 Kg. - Rs 2,50,000/- - Rs 50,00,000/- 3 Advance Payment For Land Of Shri Navneet Somani -Rs 32,50,000'- 4 Advance Payment For Land of Smt. Savita Somani Rs 15,00,000/- Total - Rs 1,00,00,000/- Document 3 S. Item Allege Amoun No d t of differ Additio Reason of Wrong alleged difference Corrected Alleged Supporting Figure/ Figure differenc Calculati Calculatio documents ence n....
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....‚? उतà¥à¤¤à¤° - मेरी Factory M/s Shreeji Textile Pvt. Ltd. पर पाये गये excess stock जिसमें 5000 मीटर कपड़ा, जिसकी लागत रू.2,50,000/- व excess stock of Yarn जिसका वजन 25000 कि.गà¥à¤°à¤¾ है कि लागत रू.50,00,000/- है। इसके अतिरिकà¥à¤¤ मेरे सà¥à¤µà¤‚य के रू.3250,000/- व मेरी पतà¥à¤¨à¥€ के रू. 15,00,000/- à¤à¥‚मि खरीदने बाबत Advance दिये गये है जो कि हमारी अघोषित आय है। इस प....
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....¿ इसके बारे में आपको कà¥à¤¯à¤¾ कहना है। उतà¥à¤¤à¤° इस संबंध में मेरा यह कहना है मेरे यहां से पà¥à¤°à¤¾à¤ªà¥à¤¤ à¤à¤¨à¥‡à¤•à¥à¤¸à¤° व फिजीकल सà¥à¤Ÿà¥‰à¤• से गणना करने के बाद जो à¤à¥€ अघोषित आय पायी जाती है उसके लिठआयकर अधिनियम के तहत जिस वà¥à¤¯à¤•à¥à¤¤à¤¿ या जिस फरà¥à¤® से संबधित होगी à....