TaxTMI 
TaxTMI 
2020 (12) TMI 99
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....stified in deleting the addition of Rs. 3,66,72,718/- despite the fact that the assessee never retracted from the confession of surrendering income of Rs. 5,00,00,000/- made during the course of survey u/s 133A of I.T. Act ?. 3. Whether in the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in denying the evidentiary value of statement recorded u/s 133A(3) of the I.T. Act, 1961 despite the fact that admission of additional income surrendered was based upon the discrepancies brought out during the course of survey u/s 133A of the I.T. Act, 1961 and were clearly admitted by the director of assessee company? 4. Whether in the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting addition of Rs. 50 lacs which was made pointing out the deficiencies in books of accounts and applying provisions of sec. 145(3) of I.T. Act, 1961 and the application of provisions u/s 145(3) of the Act has also not been uphold by CIT(A)?" ITA No. 1429/JP/2018 (Assessee's appeal): "1. On the facts and in the circumstances of the case and in law, ld. CIT(A) has grossly erred in confirming the addition of ....
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....ccounts. It was held by the AO that it is established that Mr. Nagar Mal Agarwal had rightly disclosed the undisclosed income of Rs. 5.00 crores in A.Y. 2013-14 and 2014-15, which is also established from the fact that assessee itself after the survey had revised its return of income and had declared additional income of Rs. 1,33,27,282/- for A.Y 2013-14. Further assessee never filed any letter for making retraction from the surrender made during the survey. Such admissions, made during the course of survey, legally bind the person who deposed such facts, until and unless rebutted or disproved by evidences otherwise. In the present case the evidences of unrecorded expenditures / receipts are available in the documents impounded during the course of survey and also in the form of admission in the statements recorded of the directors of the assessee company. Accordingly, the addition amounting to Rs. 3,66,72,718/- was made to the total income declared by the assessee which on appeal, has been deleted by the ld CIT(A). Against the said findings, the Revenue is in appeal before us. 4. During the course of hearing, the ld. CIT/DR submitted that a survey operation u/s 133A of the Act ....
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....a year to retract from its stated position. Further, it is pertinent to note that assessee did not even bother to controvert these facts later on also before the AO. Even these facts have also not been looked into by ld CIT(A) while deciding the present appeal. 5. It was further submitted that the decision of the ld.CIT(A) is not acceptable on merits as well as he has not properly appreciated the facts of the case. During the course of survey proceedings, Shri Nagarmal Agarwal, director of the assessee in his statement admitted an undisclosed income of Rs. 5,00,00,000/- in the hands of the assessee company in FY 2012-13 & 2013-14 relevant to AY 2013-14 & 2014-15. In reply to question No.26 of statement, Shri Nagarmal Agarwal specifically admitted that the transactions found recorded in impounded documents pertains to the company and other related entities and was not recorded in regular books of account and estimated such amount at Rs. 5 crores, received mainly from sale/advance of sale of plots. The said statement was also confirmed by Shri Durga Prasad Agarwal, another director of the assessee company and also the brother of Shri Nagarmal Agarwal. The assessee had revised its ....
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....ation, following decisions by various Hon'ble Courts have held the importance of evidentiary value of sworn statement and voluntary disclosure made thereof during survey operation / S&S Operation and treatment of subsequent retraction made after a gap of long duration and support the case of the department: * Pullangode Rubber Products Co. Ltd. Vs. State of Kerala (1973) 91 ITR 18 SC * Hon'ble Jurisdictional High Court in the case of Sh Ravi Mathur (DB Income-tax appeal no 67/2002) & others * Dr. S. C. Gupta vs. CIT 248 ITR 782 (All) * S. S. Ratanchund Bholanath vs. CIT 210 ITR 682 (MP) * Hirasingh Co. Vs. CIT 330 ITR 791 (HP) * K. I. Pavunny vs. Asstt. CCWE 1997 (90 ELT 241) (SC) * Vinod Solanki vs. Union of India (SC) (Civil Appeal No. 7407 of 2008 dated 18/12/2018) * Pr. CIT vs. Roshan Lal Sancheti (DB. Appeal No. 47/2018 dt 30/10/2018) (Rajasthan High Court) * Bachittar Singh vs. CIT (2010) 328 ITR 400 (P& H) 8. It was accordingly submitted that in light of aforesaid decisions, sworn statement recorded of one of the director Sh Nagarmal Agarwal and duly confirmed by another director Sh. Durg....
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....d by the ld AR that it is settled proposition of law that statements during the course of survey cannot be recorded on oath as is clear from the provisions contained u/s 133A(3)(iii) of the Income Tax Act, 1961, which empowers the Income Tax Authorities to record the statements of any person which may be useful or relevant to any proceedings under the Act. For that purpose we have to consider the provision contained in section 133A(6) which mandates that if a person refuses or evades to give replies or does not facilitate the Income Tax Authority to inspect books of accounts or other documents or to check or verify any cash, stock or other valuable article or thing or to furnish any information or to have his statements recorded, either refuses or evades to do so, then they shall have all the powers under sub section (1) of section 131 for enforcing compliance with the requirement. However, in the instant case, during the survey proceedings the assessee offered all facilities to the survey party and at no occasion any concealment of fact, disrespect or misbehavior was noticed by the survey party. The Income Tax Authorities can examine any person on oath as per provisions contained ....
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....ed for tax in A.Y.2013-14 by filing revised return of income. Further, in the absence of any corroborative evidences found as a result of survey, the balance amount of Rs. 3,66,72,718/-was not included in the total income declared for the year under consideration as the same was offered in the statements signed on dotted lines. The survey proceedings were commenced in the noon at around 1.15 PM on 04.09.2013 and continued till late evening of 05.09.2013 when the statements of the director were concluded after prolonging the proceedings throughout the night and the director during such long interrogation got exhausted and thus under those circumstances they had signed on the statements dictated by the survey authorities without having applied their mind. 13. The assessee thereafter during the course of assessment proceedings furnished all such information with regard to the additional income offered for tax. Further, the assessee company furnished the audited financial statements for the year under consideration as well as of the preceding year which were prepared from the books of accounts maintained in the regular course of business which could not be produced for verification ....
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....not call for any addition. Further, so far as loose paper/ impounded documents during the survey are concerned, pagewise explanation of each and every paper was furnished during the course of assessment proceedings and in fact wherever such loose papers represented entries not recorded in books of accounts, the same were quantified and total of such unrecorded entries worked out at Rs. 1,33,27,282/- and the same were duly offered for taxation in A.Y.2013-14 through revised return and has been accepted by department. However, just because such sum was lower than Rs. 5.00 crores, i.e. the alleged admission by director, addition was made by ld.AO for balance amount of Rs. 3,66,72,718/- without in any manner substantiating such sum with documents. In other words, ld. AO has taxed the income, which was never earned by assessee, solely on the basis of statements of directors, which remained uncorroborated. In this regard, reliance is placed on the decision of Hon'ble Supreme Court in case of CIT vs Godhra Electricity Ltd. (225 ITR 746). 16. It was further submitted that in the statements recorded of the director Shri Nagarmal Agarwal during the course of survey, the section under whic....
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....circumstances the same could be recorded at the business place of the assessee. Further u/s 131(1A), statement can be recorded by Pr. DG or DG or Pr. Director or Director or ADIT or DDIT or authorized officer of income tax for making any investigation or enquiry where no proceedings under the Act are pending. In the case of the assessee, since survey action u/s 133A has taken place, such provisions are also not applicable. 19. It was further submitted that the admission of Rs. 5.00 crores made therein was an adhoc figure on absolutely estimate basis as looking to volume of documents and in absence of books of account which were got deleted due to computer error, it was not possible for the directors of the assessee company to verify each and every paper. However, after obtaining the copies of the papers impounded, the precise working was done and an income of Rs. 1,33,27,282/- was further included in the total income for AY 2013-14 by making revision of return and total profits of Rs. 2,12,96,713/- was computed for the year under appeal as is evident from the Profit & Loss account. Thus it is not the case of retraction from the statements recorded during the survey. It is fur....
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.... examining him on oath, (c)..... (d)..... 22. It was submitted that a survey authority shall be empowered to record statements on oath during survey only in the event a person refuses or evades to furnish details sought by survey teams or denies to facilitate survey team in conducting enquiry in any manner or refuses or evades to have his statement recorded and not otherwise. In the instant case, assessee afforded the income tax authorities all the facilities required for verification/inspection of records or any other information and also did not refuse for recording his statement. Further, it is an admitted fact that books of accounts could not be made available to the survey officials as the same were deleted due to some technical error which was beyond the control of assessee. This fact was affirmed by the technical experts of the department also and has not been doubted. Even otherwise nowhere in the proceedings, it was alleged by the department that assessee had tried to evade information from the survey team leading to issue of notice u/s 131. In the scenario, survey officials were not authorized to record statements u/s 131. 23. From the perusa....
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....s 131A(1)], by stating that he agreed with the statements of Sh. Nagarmal Agarwal which cannot be held as the statements recorded in response to notice u/s 131. The statement of Shri Durga Prasad Agarwal were not recorded in response to notice u/s 131 on 05.09.2013 and therefore, the allegation of the AO that such statement were recorded u/s 131 is incorrect. This fact is further fortified from the perusal of statements of Shri Nagarmal Agarwal where at the end of the statement of Shri Nagarmal Agarwal only one line is written by Shri Durga Prasad Ji and that too without any reference of section 131 [though rightly so as in survey proceedings statements are normally recorded u/s 133A(1) and not u/s 131] or by administering oath which is the legal necessity for recording the statement u/s 131. It is a single sentence statement and not statements under any specific section and that too without mentioning that such confirmation is on oath. He accordingly supported the order and the findings of the ld CIT(A). 25. We have heard the rival contentions and purused the material available on record. We find that in this case, a survey operation was carried out at the business premises of ....
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....e same, the return of income was filed by the assessee wherein the remaining additional income disclosed during the course of survey to the tune of Rs. 3,66,72,718/- was not offered to tax which the Revenue has brought to tax and is thus the subject matter of present dispute. 26. As per the Assessing officer, loose papers found during the course of survey include number of papers which are not recorded in the books of accounts and during the course of assessment proceedings, the assessee was asked to furnish the page-wise details of the loose papers found during the course of survey. He was also asked to verify the same from the books of account so prepared and produce before undersigned for examination and after verification, it has been found that there are number of papers containing entries in lacs which are not recorded in the books of accounts. It was accordingly held by the AO that it is clearly established that Mr. Nagar Mal Agarwal in his statement recorded during the course of survey had rightly disclosed the undisclosed income of Rs. 5.00 crores in A.Y. 2013-14 and 2014-15, which is also established from the fact that assessee itself after the survey had revised its r....
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....orked out at Rs. 1,33,27,282/- which was offered for tax in A.Y.2013-14 by filing revised return of income, however, for the year under consideration, in the absence of any corroborative evidences found as a result of survey pertaining to the year under consideration, the balance amount of Rs. 3,66,72,718/- was not included in the total income declared in the return of income. 28. It is not in dispute that the statement of the director of the assessee company was recorded u/s 133A during the course of survey operations and it is a settled legal proposition that said statement alone without any corroborating material doesn't have any evidential value. What is therefore relevant to examine is whether the statement of the director of the assessee company is corroborated with any material in form of papers/documents etc found during the course of survey operation and whether such papers/documents pertain to transactions which pertain to the financial year 2013-14 relevant to the impugned assessment year 2014-15. In this regard, we refer to the findings of the AO wherein it was held that certain loose papers were found during the course of survey and the same were not recorded in the....
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....essee has submitted detailed explanation before the ld CIT(A) as well as before us and the same are contained at para 3.1.1 page 12 of the appellate order and the same reads as under: Ann. Page No. Nature of Document Particulars Amount A-3 31 Summary of Flats/plots sold by assessee in "Midas Residency" project Difference in booking amounts and registered deed amounts offered for taxation in A.Y. 2013-14 Recorded in books of accounts A-4 12 Ledger account of DIS (DIFF) for the period from 01.04.2013 to 14.08.2013. Opening balance of ledger as on 01.04.2013 Rs. 27,11,408 Related to M/s Mojika Proprietorship Firm of Sh. Durga Prasad Agarwal and not to assessee company. No financial implication in the case of assessee A-4 22 Ledger of Raika Construction for the period 01.04.2012 to 06.06.2013 Cash payment of Rs. 2 lacs recorded in books of accounts. 1,00,000/-(pertains to A.Y.2014-15) A-8 201- 217 Cash payment vouchers Recorded in Books of Accounts of F.Y. 2012-13 - A-8 230-232 Cash payment vouchers Recorded in books of Accounts of F.Y. 2012-13 - A-8 233-236 Cash payment vouchers Recor....
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....arwal has surrendered a total amount of Rs. 5 Crore as undisclosed income of the appellant company for the AY 2013-14 and 2014-15. The appellant has included the amount of Rs. 1,33,27,282/- in its revised return of income for the AY 2013-14 but it has not included the remaining amount of Rs. 3,66,72,718/(5,00,00000 - 1,33,27,282) in its return of income for the year under consideration. In the assessment order, besides the above addition of Rs. 1,33,27,282/, the AO has made an addition of Rs. 3,66,72,715/-to the income of the appellant on the basis of the admission of Shri Nagarmal Agarwal, the director of the appellant company, recorded during the course of survey. (vii) During the appellate proceedings, it was the contention of the appellant that the statement of its directors Shri Nagarmal Agarwal recorded during the course of survey conducted u/s 133A has no evidentiary value as the statement during the course of survey cannot be recorded on oath as is clear from the provisions contained u/s 133A(3)(iii) of the Act, which empowers the Income Tax Authorities to record the statements of any person which may be useful or relevant to any proceedings under the Act. It was t....
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.... Nagarmal Agarwal and therefore, the same should be regarded to have been recorded u/s 133A(1) of the Act. It was also submitted that a statement can be recorded u/s 131(1)(d) of the Act by issuing commission and the statement u/s 131(1A) of the Act can be recorded by Pr. DG or DG or Pr. Director or Director or ADIT or DDIT or authorized officer of income tax for making any investigation or enquiry where no proceedings under the Act are pending and since survey action u/s 133A has taken place, such provisions are also not applicable. It was further submitted that the case laws submitted earlier, wherein, it has been held that no statements u/s 133A can be recorded on oath during the curse of survey, are applicable and accordingly, it was submitted that the addition of Rs. 3,66,72,718/-solely made on the basis of such statements ceserves to be deleted. (ix) In view of the above dispute whether the statement of Shri Nagarmal Agarwal was recorded on oath u/s 131 or u/s 133A of the Act, the AO was required to attend with the relevant survey folder and on examination of the same, it has been observed that no summon u/s 131 of the Act was available thereon in respect of Shri Nag....
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....that sub section 3 of section 133A contains general powers of Income Tax authority to record statements during survey, whereas sub section 6 of section 133A specifies that in the event of non cooperation on the part of person who is required to facilitate the survey official in any manner, survey authority shall have all the powers as contained u/s 131(1) to enforce compliance. As per Section 131 (1), Income Tax Authorities shall have same powers as are vested in a court under the Code of Civil Procedure 1908, which inter alia includes: (a) ................... (b) enforcing the attendance of any person, including any officer of a banking company and examining him on oath, (c) ............................ (d) ..................... It is thus submitted that a survey authority shall be empowered to record statements on oath during survey only in the event a person refuses or evades to furnish details sought by survey teams or denies to facilitate survey team in conducting enquiry in any manner or refuses or evades to have his statement recorded and not otherwise. In the instant case, assessee afforded the income tax authorities all the faci....
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....ed to have been recorded u/s 131, as submitted above there were no circumstances leading to record the statement u/s 131 and as is clear from the statements itself, they stood completed on the very same day i.e. on 04.09.2013 where the same were concluded (APB 40) and were not kept pending for further recording thus the proceedings as initiated vide summons u/s 131 stood complied with and concluded on 04.09.2013 itself. It is further submitted that on perusal of statements of Shri Durga Prasad Agarwal dated 04.09.2013/ 05.09.2013, it is quite evident that these statements are recorded u/s 133A(1) as is quite clear from the preface of the statements and the allegation of AO is totally incorrect that these statements have been recorded u/s 131. Since, the statements have been recorded u/s 133A(1), there should not be any occasion of oath to be administered and if at all some oath seems to be administered, as seen from perusal of the statements, same has no validity in the eyes of law. Without prejudice to above, there was no occasion with the survey team to issue the summon u/s 131 and as such summon if any issued, was wrongly issued, Moreover consequent statements were inco....
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.... to reproduce hereunder the provisions of section 133A(6) of the Act as under: "(6) If a person under this section is required to afford facility to the income-tax authority to inspect books of account or other documents or to check or verify any cash, stock or other valuable article or thing or to furnish any information or to have his statement recorded either refuses or evades to do so, the income-tax authority shall have all the powers under sub-section (1) of section 131 for enforcing compliance with the requirement made: Provided that no action under sub-section (1) shall be taken by an Assistant Director or a Deputy Director or an Assessing Officer or a Tax Recovery Officer or an Inspector of Income-tax without obtaining the approval of the Joint Director or the Joint Commissioner, as the case may be." (xi) It is to be noted that as per the provisions of section 133A(6) of the Act, the statement u/s 131(1)(d) of the Act could be recorded in the circumstances, as specified therein and as per the proviso to section 133A(6) for exercising of such powers u/s 131 of the Act, the prior approval of the concerned Range Head is required to be taken. ....
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....ining the prior approval of Joint/Additional CIT prior to recording statement u/s 131 of the Act was not complied with. Thus, in view of the factual matrix of the case and the legal position as discussed above, I find merit in the contention of the appellant that the statements of Shri Nagarmal Agarwal and Shri Durga Prashad Agarwal were not recorded u/s 131 of the Act and these were recorded u/s 133A of the Act. (xiv) It may be mentioned here that the statement recorded u/s 133A of the Act has no evidentiary value as held by the Hon' ble Apex Court and other judicial authorities. In the case of CIT Vs Shri Roshan Lalin ITA No. 185/2014 order dated 03/11/2015, it has been held by the Hon'ble High Court of Rajasthan that the statement recorded under Section 133A has no evidentiary value and any admission made during such statement cannot be made basis of addition. Further, the Hon'ble Supreme Court in the case of CIT Vs S. Khader Khan Son [2012] 25 taxmann.com 413 (SC) dismissed the civil appeal by the income tax department and confirmed the order of Hon'ble Madras High Court in the case of CIT Vs S. Khader Khan Son [2008] 300 ITR 157 (MAD.) wherein....
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....hat the materials collected and the statement, obtained under section 133A would not automatically bind upon the assesses we do not see any reason to interfere with the order of the Tribunal." (xv) It may be mentioned that recently, the Hon'ble Rajasthan High Court, Jaipur Bench in the case of CIT Vs. M/s Maverick Share Brokers (P) Ltd. vide its order dated 23.03.2017 in D.B. Income Tax Appeal No. 14/2016, has held that: "4. In our considered opinion, the appellant and the other sister concerns are independent and merely on 133A statement, the addition could not have been made. Therefore, the CIT(A) as well as the Tribunal have not committed any error in deleting the addition of Rs. 80,00,000/." (xvi) It may be mentioned that in the case of CIT vs. Mantri Share Brokers Pvt. Ltd. in D.B. ITA No. 502/2011, vide its order dated 05.09.2017, relating to survey u/s 133A of the Act, it has been held by the Hon'ble High Court of Rajasthan that: 10. Before proceeding with the matter, it will not be out of place to mention that except the statement in the letter, the AO has no other material on record to assess the income of Rs. 1,82,00,000/-. ....
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....chnical problem persisting with the computer and the data got corrupt. In its written submission, the appellant has stated, in brief the entries, the period to which the impounded material belonged as relied upon by the AO for making the impugned addition. It was submitted that the papers referred by the AO either do not pertain to the year under appeal or do not have financial implication in its case or are recorded in the books of accounts. It was the contention of the appellant that the AO had incorrectly observed that admission obtained during survey was based on the incriminating documents and as per sweet will of directors of appellant company. It was also submitted that no corroborative evidences, whatsoever, have been brought on record by the AO for making addition of Rs. 3,66,72,718/- and the addition has solely been made on the basis of statements recorded on oath during survey, which do not have evidentiary value. It was also stated that it is a cardinal principle of law that only real income should be taxed and no hypothetical income could be added. In its case, books of accounts were duly audited by chartered accountant without any adverse remarks and thus did not call....
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....vidence but it cannot be said that it is conclusive. It is open to the person who mace the admission to show that it is incorrect. Thus, if the statement of Shri Nagramal Agarwal is treated as an evidence but the same was retracted by the appellant in its return of income for the year under consideration in the absence of any corroborating evidence. It is noted from the details of the impounded material as relied upon by the AO and as stated in the assessment order that most of them pertained to AY 2013-14. In fact, only one impounded document marked as Annexure-`A-A/251,252' (cash payment of Rs. 1 Lac on 03.04.2013) pertained to the period under consideration and that too were stated to be recorded by the appellant in its books of accounts. Further, the books of accounts were audited and there is no evidence on record of any defects in such books of accounts and these books of accounts substantiate the retraction made by the appellant company in its return of income. (xxi) It may be mentioned that in the case of Basant Bansal Vs ACIT [2015] 63 taxmann.com 199 (Jaipur - Trib.), it has been held by the Hon'ble ITAT, Jaipur that: "2.26 Going by thes....
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....not be over-looked. The AO has every right to controvert the claim of the assessee but by giving a contrary finding based on the material. Therefore, if the AO was not in agreement with the claim of the assessee, then necessary enquiry ought to have been conducted to verify the correctness of the claim of the assessee instead of relying on the statement recorded under section 132(4) of the Act and ignoring the evidence filed by the assessee to show that the amount of Rs. 1,60,00,000/- was received back by the assessee and was available for giving advance during the year under consideration. As regards the decision of Hon'ble Jurisdictional High Court in case of CIT vs. Shri Ravi Mathur (supra), we note that in the said decision the controversy was regarding the figures found recorded in the seized material was admitted by the assessee in the statement under section 132(4) as in lacs. However, subsequently the assessee took a stand that these amounts found recorded in the seized material are not in lacs but in thousands. Therefore, the subsequent stand of the assessee disputing the entries in the seized material which were duly admitted in the statement recorded under s....
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....of Delhi that: ".........A plain reading of section 158BB(1) does not contemplate computing of undisclosed income solely on the basis of a statement recorded during the search. The works 'evidence found as a result of search' would not take within its sweep statements recorded during search and seizure operations. However, the statements recorded would certainly constitute information and if such information is relatable to the evidence or material found during search, the same could certainly be used in evidence in any proceedings under the Act as expressly mandated by virtue of the Explanation to section 132(4). However, such statements on a standalone basis without reference to any other material discovered during search and seizure operations would not empower the Assessing Officer to make a block assessment merely because any admission was made by the assessee during search operation. 38. Fifthly, statements recorded under Section 132(4) of the Act do not by themselves constitute incriminating material as has been explained by this Court in Harjeev Aggarwal (Supra)." (emphasis supplied) (xxiv) Thus, in view of the above discussion and looking to the factu....
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....ing the provisions of section 145(3) of the Act. 34. In this regard, the ld. CIT D/R submitted that during the course of survey, no books of accounts were found/ available which shows that there were no books of accounts prepared by the assessee and they have been created as per the sweet will of the assessee as and when required. It was submitted that during the course of survey, evidence in respect of out of books sales as well as out of books expenses were found and impounded from the office of the assessee company. In the statements recorded during the course of survey, director of the assessee company has also surrendered a sum of Rs. 5 crores in the hands of the assessee company on the basis of the above mentioned evidences of out of books sales and expenses. Accordingly, a show cause was issued to the assessee as to why the books of accounts should not be rejected invoking provisions of section 145(3) of the Act. In response, it was submitted by the assessee that books of accounts were duly audited by a Chartered Accountant and supported by necessary bills and vouchers and no error whatsoever was pointed out by the auditors. The submission so filed by the assessee were....
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.... file containing the books of accounts for the year under consideration could not be retrieved and being a technical issue, the same is beyond the control of the assessee and is an undisputed fact. However, the AO solely for the reason that director of the assessee company in the statements recorded could not specifically assert about the books of accounts, has drawn adverse inference that assessee does not maintain books of accounts on regular basis. 36. It was submitted that after the completion of the survey and upon receiving the copies of the loose documents impounded, the books of accounts were recasted and got audited, wherein no discrepancy whatsoever was pointed by the auditors and in fact no defect was pointed by AO also. It is an established law that the books of accounts, if found incomplete as on the date of survey, the assessee should be given an opportunity to complete the same as to declare the real income. However, the AO has not appraised such facts and has drawn adverse inference more particularly when such accounts have been duly audited without any adverse remarks. 37. It was further submitted that no defect whatsoever was pointed by ld. AO in books of ac....
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....tained and supported by the necessary bills and vouchers, thus the same deserve to be accepted. The ld A/R accordingly supported the findings of the ld. CIT(A) stating that the latter has correctly appreciated these facts and has deleted the additions and the order so passed be upheld. 40. We have heard the rival submissions and perused the material available on record. The Assessing officer has rejected the books of accounts invoking the provisions of section 145(3) of the Act and has made an addition of Rs. 50 lacs in the hands of the assessee company. The reason why the AO has rejected the books of accounts is that the books of accounts were not found/available at the time of survey and the same have been prepared subsequently and are thus not reliable. We find that survey was conducted at the premises of the assessee on 4.09.2013 and it is an undisputed position that the books of accounts maintained on the tally software were deleted and could not be retrieved by the experts of the department during the survey proceedings. However, basis vouchers and other details available with the assessee, the books of accounts were subsequently re-casted and were audited and basis ....
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.... by the auditor. It is also noted that there is no evidence on record that the AO has found some specific defects in the books of accounts of the appellant and it appears that same were rejected without any cogent reason. If the books of accounts were not available during the course of survey, that itself cannot be the sole ground for rejection of books of accounts of the appellant. It may be mentioned that the books of accounts regularly maintained in the course of business have to be taken as correct unless there are strong and sufficient reasons to indicate that they are unreliable. The AO has to prove satisfactorily that account books are unreliable, incorrect or incomplete, before it can reject accounts, which may be done by showing that important purchases are omitted therefrom or proper particulars or vouchers are not forthcoming or the accounts do not include entries relating to a particular class of business. The rejection of accounts should not be done on the basis of conjectures and surmises. In view of the above discussion and looking to the totality of facts and circumstances of the case, it is held that the AO was not justified in rejecting the books of accounts u/s 1....
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....d under the head "Income from business or profession". Such return stood accepted by department as no further communication was received by the assessee. It was submitted that since the said expenses were claimed as advances made to the various contractors which remained unrecorded, therefore after the survey in the year under consideration, the total cost of the projects for which these advances were made stood inflated to the extent of Rs. 1,33,27,282/-. It was submitted that in order to avoid the double taxation of income, in the computation of income prepared for the year under consideration, the amount of Rs. 1,33,27,282/- was claimed as deduction being already offered in preceding assessment year, however such explanation of assessee was not accepted by ld. AO and he made the addition of Rs. 1,33,27,282/- on the allegation that assessee has claimed such reduction in computation which was an attempt to take back the sum offered in preceding year. It was submitted that sum of Rs. 1,33,27,282/- was offered for taxation in A.Y 2013-14 pertaining to advances made to contractors which were not recorded in books of accounts. It was submitted that the assessee being a real estate dev....
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....1,33,27,282/- should not be added back in its income as wrongly claimed in its return of income. In response, the assessee furnished the following explanation which reads as under:- "As a result of survey conducted at the business premises of the assessee certain loose papers and documents were impounded based on which a working was made and accordingly an additional income of Rs. 1,33,37,282/- was included in the total income of A.Y 2013-14 and the return of income was revised after payment of tax which stood filed in terms of the e-filing acknowledgement No. 836396711201113 dated 20.11.2013 wherein in the computation of income it has been stated that the 'advances given to various contractors not accounted for in the books of accounts and included under the head 'income from Business or Profession. Since the said expenses were claimed to the advances made to the various contractors which remained unrecorded therefore after the survey in the year under consideration the total cost of the projects for which these advances were made stood inflated to the extent of Rs. 1,33,27,282/- which form part of the closing stock declared for the year under consideration at Rs.....
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....ereby disallowed and added back to its total income." 49. We therefore find that the Assessing officer has recorded a finding that out of the total disclosure of Rs. 5 crores made for A.Y. 2013-14 and for A.Y. 2014-15, the disclosure for A.Y. 2013-14 amounting to Rs. 1,33,27,282/- was in respect of the unaccounted advances made to various contractors during F.Y. 2012-13. The same is also the position of the assessee wherein it has revised its return of income for A.Y 2013-14 offering the said amount as additional income as advances given to various contractors which are not accounted for in the books of accounts. Therefore, as far as nature of additional income offered by the assessee in A.Y 2013-14 is concerned, it is admittedly in the nature of advances given to the various contractors engaged by the assessee which were not recorded in the books of accounts. The question that arises for consideration is once this additional income is offered and brought to tax as an intangible addition in the hands of the assessee for the previous assessment year, can the assessee be allowed telescoping/set off of the same in the impugned assessment year. In this regard, the claim of the asses....