TaxTMI 
TaxTMI 
2014 (1) TMI 1890
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....ppellant's godown. Hence the addition of Rs. 2,01,89,800/- deserves to be deleted. 2. On the facts and in the circumstances of the case the Ld. CIT(A) has grossly erred in sustaining an addition of Rs. 27,45,862/- on account of inflation in the purchases arbitrarily, without considering the vital evidences in the shape of statements. Thus the addition of Rs. 27,45,862/- deserves to be deleted. ( No separate addition made and addition has been telescoped with the addition sustained in GOA No. 1 above). 3. On the facts and in the circumstances of the case the Ld. CIT(A) has grossly erred in upholding an addition of Rs. 4,00,000/- made on account of unexplained investment in renovation of office premises simply on the basis of surrender obtained during survey arbitrarily. 3.1 That the Ld. CIT(A) has further erred in ignoring the fact that the premises is on rent and minor repair were done which are properly accounted for an other fixtures are separately debited under respective heads. Hence the addition of Rs. 4,00,000/- so made deserves to be deleted. 3.2 That the Ld. CIT(A) has failed to appreciate the fact that the A.O. has not brought on record ....
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....come. This amount was surrendered as unaccounted income of the assessee company." 2.3 We have heard the rival submissions and have carefully perused the entire record. The facts of the case in brief are that the assessee company derives its income from manufacturing and trading in Pure Ghee in the brand names of"Binola and Diary Fresh'. For assessment year 2008-09, the assessee company filed its return of income on 30-09-2008 declaring its income at Nil. However, the assessment was completed u/s 143(3) of the I.T. Act, 1961 ('the Act' for short) at a total income of Rs. 3,39,40,466/-. The income of the assessee has been computed as under:- Income from business Net from as per balance sheet Add (as per computation sheet) Rs. (-) 5632971/- Depreciation disallowed Rs. 735319/- Disallowed u/s 37 Rs. 183041 Rs. 918360/- Addition as discussed above i. Disallowance out of Telephone expenses as discussed above Rs. 66439/- ii. Delayed PF and ESI Rs. 72157/- Rs. 138596/- --------------------- Total (A) ....
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....s. Unique Age Art vs. ACIT (ITA Nos. 271/JP/2013 and 458/JP/2013 for the assessment year 2008-09) vide order dated 18-12-2013 from this very Bench. In addition to this, the ld. AR has also relied on the decision of Hon'ble Apex Court in the case of CIT vs. Khader Khan (2012) 254 CTR 229. 3.2 To contradict the above, ld. DR stated that the Revenue authorities have powers to record the statement even during survey proceedings and that any admission made during survey proceedings is justified. 3.3 After considering the rival submissions, we have found that the impugned addition is solely based on admission made by the Director Shri Hem Raj Jain, recorded on oath during survey proceedings. We have gone through the relevant portion of this statement also. The submissions of the ld. AR that any statement recorded during survey proceedings conducted u/s 133A of the Act has no evidentiary value is found to be a correct position of law. The Hon'ble Apex Court has clearly laid down this principle in the case of CIT vs. Khader Khan (supra). This Bench has clearly spelt out this issue in favour of the assessee vide para 3.4 of its order in the case of M/s. Unique Art Age vs. ACIT....
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.... respectfully following the legal position, we exclude the admission made in the statement for supporting the impugned addition. Now we have to see as to whether de hors this statement can any addition in this item be made or sustained. It was stated by the ld. AR that there is no discrepancy in the stock found during survey and to support this version, the ld. AR has submitted written submission which is being extracted verbatim as under:- ''That a survey operation in this case was carried out u/s 133A of The Income Tax Act, 1961 at the business premises of the assessee and during the course of survey it was informed to the directors of the appellant company that the entire stock stated to have been taken physically and available was quantified by the survey team and accordingly excess stock was worked out and a surrendered towards the excess stock was obtained from the directors of the appellant company in their statements recorded on oath, though actually there was no excess stock available with the assessee. The details of the stock as per books and physically quantified by the survey team during the course of survey is tabulated as under:- Name....
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.... by the director puts the veracity of the statements in doubt as no sane person would make such admissions under normal circumstances, the fact that the atmosphere during the course of survey and search conducted by the Income Tax Department is a charged atmosphere and the department's action generates heat. Thus the person deposing the statement is bound to suffer from the persecution-mania and the statements as recorded deserves to be viewed by taking into consideration the entire set of facts. The stock stated to be found in the business premises is an impossible quantity which could be stored in the available area which continues to be remain so as it existed on the date of survey and could thus be verified even after survey and a proposal was made to the department during the assessment proceedings, but Ld. AO never paid any attention on such a request because it would have brought the truth to surface. During the course of assessment proceeding a report of the technical expert was also submitted before Ld. AO (APB 101-105) wherein it has categorically been stated that the maximum quantity which could be stored in the godown (cold storage) of the assessee is only of 9....
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.... as per the report of technical expert and survey team had quantified the same at Rs. 1,14,974/- and assumed the difference in quantity was due to the fact that quantity of butter was in process and not required to be stored in the cold storage as it depended on the age of cream or butter. All the above observations / allegation of the Ld. CIT (A) do not find force in view of following facts:- 1. On the perusal of the statement of the assessee recorded u/s 133A it would be evident that the statement recorded are nothing more than the written papers signed by the assessee and are the "obtained statements" signed on dotted lines. Shri Hemraj Jain has made surrender of Rs. 4,00,14,980/- on various issues as undisclosed income of the assessee company without in any manner consulting with the other director or without linking or referring the books of accounts maintained in the normal course of business. After the survey, assessment proceeding was first opportunity available to the assessee, when he could have pointed out any irregularity in the survey proceedings and further the assessee has retracted the statement at the time of filing of return of income wherein the....
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....ibunal, Delhi Bench in the case of Bansal Strips (P) Ltd. Vs. ACIT reported in 99 ITD 177 wherein it has been held that "...... During the course of search proceedings, the search authorities had attempted to verify the stock details kept by the assessees by comparing the stock as per books with inventory of physical stock taken during the course of search. The entire exercise in the cases of about half a dozen business concerns was commenced and completed within a few hours.... That being so, the finding of excess stock being found during the course of search operation had been given by the authorities below on grossly inadequate material. That finding would not be sustained even under the parameters of income tax assessment proceedings not bound by technical rules of evidence. Therefore, the additions made by the authorities below, on the alleged excess stock, shortage of stock physically found during the course of search proceedings in all the appeals were directed to be deleted." It is further submitted that the assessee is maintaining regular books of accounts consisting of cash book, ledger, bank statements and vouchers for expenses. The accou....
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....not be said that the Revenue had lost lawful tax payable by the assessee. The view adopted by the Assessing Officer in the assessment order passed under section 143(3) was not unsustainable in law and was one possible view. Thus, the Commissioner had wrongly exercised his power under section 263 for both the years and his orders were quashed for both the years.'' 3.4 In contra to the above submissions, the ld. DR has supported the orders of the authorities below and has justified the impugned addition. 3.5 However, after carefully considering the rival submissions on this issue and after relying on the relevant decisions thereto, we are of the considered opinion that difference in stock is not real. The survey party has quantified the stock of around 2,48,000 kg of butter and ghee on the same day which is humanly impossible on same day. The AO has assumed and presumed that difference in quantity of raw material i.e. Butter and Milk cream of 20,974 kg on account of maximum quantity could be storage of 94,000 kg and physically stock quantified by the survey team at 1,14,974 kg was due to the fact that quantity of butter was in process. This fact has been ignored by the authorit....
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....t to 09 suppliers as listed at pages 15 and 16 of the assessment order. These summons were duly served upon them and has not been disputed by the AO. However out of the total 09 suppliers to whom summons were issued, two appeared before the AO who had deposed their statements wherein they both admitted the fact of supply of Milk Cream to the assessee company but the AO did not accept their evidences. After hearing the above submissions, we are left with no other inference that the contention of the ld. AR is correct. The assessee has maintained day to day quantitative details for the consumption of raw material and production thereof. It has also maintained the quantity of input of raw material vis-a-vis the out put of the finished goods. The method of accounting and mode and manner of recording the quantity consumed and production thereof has regularly been followed since inception. This method of accounting has not been doubted by the AO. The purchases of raw material are duly supported by the purchase vouchers and sale vouchers. These purchases / sales are subjected to check by the Sales Tax Authority. The quality of production is also supervised under 'Agmark' license. It is no....
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....d No. 3, 3.1 and 3.2 of assessee's appeal is regarding the sustained addition of Rs. 4.00 lacs made on account of investment in the construction of office by holding the same as unexplained. 5.2 The facts to this ground are that during the course of survey , a surrender of Rs. 4.00 lacs was made on account of renovation of office premises. The case of the assessee is that the assessee has taken the office at A-4, Shastri Nagar, Jaipur on rent and the petty repair work was carried out which was duly accounted for under the head 'Repairs and Maintenance' appearing in the profit and loss account of the assessee company. It was stated that the assessee company had purchased certain computers and those are also recorded in its books of account and also appear in the statement of fixed assets. It was asserted that the director of the assessee company Shri Hem Raj Jain made this surrender without referring to the books of account in this regard. Howver, the AO as well as the ld. CIT(A) were not convinced and that is why this ground has been raked up before us. 5.3 After considering the rival submissions, we have found that the impugned amounts deserves to be deleted. Both the au....
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....oyees contribution. 7.3 After hearing both the sides, we are of the considered opinion that this issue now stands covered to the effect that employees/ employer's contribution to PF or ESI are deposited or paid before filing of return. These are allowable. The Hon'ble Apex Court in the case of CIT vs. Vinay Cements reported 213 CTR 268 has replied to various queries raised in this regard by different decisions/ orders. This issue has been further churned with reference to Hon'ble Supreme Court decision reported in the case of CIT vs. Vinay Cement (supra) by Hon'ble Gauhati High Court while deciding the case of CIT vs. George Williamsons Ltd. , 284 ITR 619. Accordingly, we order to delete this addition from the hands of the assessee and allow the Ground No. 5 of the assessee. 8.1 The Ground No. 4 of the Revenue's appeal relates to deletion of addition of Rs. 25.00 lacs which was made by the AO by holding the receipt of share capital of this amount as unaccounted income of the assessee company and the ld. CIT(A) has deleted this addition. 8.2 We have heard both the parties and perused the material available on record. Both the parties have reiterated their earlie....