TaxTMI 
TaxTMI 
2017 (4) TMI 1523
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....eing ITA No. 527/JP/2016 filed by the assessee and ITA No. 595/JP/2016 filed by the revenue for the assessment year 2010-11, wherein the assessee and the revenue have taken following grounds of appeal: Grounds of assessee's appeal in ITA No. 527/JP/2016. "1. On the facts and in the circumstances of the case the Ld. CIT(A) has grossly erred in confirming the addition made in the assessment completed u/s 143(3) solely on the basis of statements recorded during the course of survey which stood retracted by the assessee through an affidavit filed by its director. Thus, the additions made solely on the basis of such retracted statements deserve to be deleted. 1.1 That, the Ld. AO has further erred in not accepting the affidavit given by the director of the assessee company without any basis and with the sole purpose to make additions without brining on record any corroborative material found during the course of survey or during the course of assessment proceedings, and also by completely ignoring the well established law that no addition can be made solely on the basis of statements recorded on oath during the course of survey conducted u/s ....
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....see out of the total disallowance of Rs. 19,99,747/- made by Ld. AO being 75% of the stipend expenses claimed at Rs. 26,66,330/-, without any basis and without considering the submissions made by assessee and the evidences adduced in support of the genuineness of the expenses claimed by assessee. Thus, the disallowance of Rs. 5,33,266/- sustained by the Ld. CIT(A) deserves to be deleted. 4.1 Without prejudice to Ground of Appeal No. 01 to 04 and in the alternative, the Ld. CIT(A) has grossly erred in confirming further disallowance of Rs. 5,33,266/- out of the stipend expenses when the trading results are not accepted and the provisions of section 145(3) are invoked." Grounds of revenue's appeal in ITA No. 595/JP/2016. "1. Whether on the facts and in the circumstances of the case and in law, the CIT(A) has erred in restricting the disallowance of stipend expenses @ 20% as against 75% applied by the A.O. 2. Whether on the facts and in the circumstances of the case and in law, the CIT(A) has erred in deleting the addition made on account of deemed dividend U/s 2(22)(e) of the I.T. Act." Similar identical grounds have also....
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.... was deposited under protest. The Assessing Officer presumed payment of tax on the surrendered amount during the course of survey as if the assessee had accepted the surrendered amount as correct. He contended that the Assessing Officer doubted about the payments made to M/s Kalpana Impex and M/s Kalpana Handicrafts. He submitted that both were providing services to the assessee. He submitted that the authorities have based their findings on the basis of pick and choose of the contents of statements, which is also not permissible under the law. He contended that the firms, who had rendered services were duly registered under the provisions of ESI. He contended that in the case of M/s Kalpana Impex, ESI was duly deducted from the payments made to the labourers, which established the existence of genuineness of the transactions. He submitted that the statements of Shri Naresh Kumar Jain, Director of the company, Shri Harak Chand Jain, employee of the company were taken during the course of survey without providing them books of account etc., therefore, their statements were not voluntary and as such these statements were duly retracted by the maker of the statements. Hence, it has no....
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.... statement recorded during the course of survey. No other material is gathered suggesting that the statements were not correct. As per the assessee, one of the firm M/s Kalpana Impex is registered with ESI and deducting contribution and depositing the same to the concerned authority. The Assessing Officer was required to make inquiry on these contents since the statement was recorded during the course of survey and such statements stated a fact which was required to be further corroborated with a plausible evidence. We find that the assessee had enclosed details of contractors from whom it had got the work done at page 9 of the paper book. A letter addressed to the Registering Authority under the Contract Labour Act is enclosed, which was received by the concerned department on 26/1/2011. At page No. 7 of paper book, a registration certificate dated 09/9/2005 is enclosed, which includes name of Smt. Kalpana Jain. These details demonstrate that Proprietor of M/s kalpana Impex was registered with concerned authority of labour department for the purpose of stitching. From the records, as made available, it is transpired that the assessee was engaging persons on contract for its work. ....
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....essee's appeal are against confirming the disallowance of stipend expenses to the extent of Rs. 5,33,266/-. The ld A.R. of the assessee has reiterated the submissions as made in the written submissions. He submitted that the Assessing Officer made disallowance of the stipend expenses solely on the basis of the statement of Shri Naresh Kumar Jain recorded during the course of survey proceedings. He submitted that the statements recorded of Shri Naresh Kumar Jain during the survey, a surrender was obtained from him wherein he admitted 50% of the payment made to trainees as bogus. However, in the assessment order, the Assessing Officer made lump sum addition @ 75% of total expenditure claimed by the assessee company in all the years. However, the ld CIT(A) considering the evidence and submissions by the assessee restricted the addition @ 20% of expenses claimed. He submitted that in the instant case, the Assessing Officer has rejected the books of account and made lump sum addition of Rs. 25.00 lacs on this account, which very well cover any and every discrepancy in the books of account, thus no separate disallowance is called for on the allegation of stipend expenses being held as bo....
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.... maximum amount of stipend. * Various discrepancies are noticed in the salary/wages sheets. * Out of list of 147 trainees submitted by the appellant, the AO noted that 50% of the mobile numbers were either wrong or incorrect * Out of the 10 trainees required by the AO to produce (who were working during different periods), only 3 were produced before the AO. (vii) It is noted that the AO has just ignored the various documentary evidences filed by the appellant including the attendance sheets of the trainees, retraction by Shri Naresh Kumar Jain, copies of the complete set of appointment documents of each trainee consisting of applications made by the individuals for being appointed as trainee in the appellant, along with his bio data, qualification , address / identity verification , and the appointment letter issued by the appellant mentioning therein the date of joining, initial salary and job details, attendance register, showing the daily attendance of each trainee along with factory in and out time , on the basis of which monthly stipend payment is done , along with copy of entry card of each trainee. Copy of monthly stipend payment sheet, d....
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....ry value as contemplated under law, vide Paul Mathews and Sons v. CIT [2003] 263 ITR 101 (Ker.); (iii) The expression "such other materials or Information as are available with the Assessing Officer" contained in section 158BB of the Income-tax Act, 1961, would include the materials gathered during the survey operation under section 133A, vide CIT v. G. K. Senniappan [2006] 284 ITR 220 (Mad.); (iv) The material or information found in the course of survey proceeding could not be a basis for making any addition in the block assessment, vide decision of this court in T. C (A) No. 2620 of 2006 (between CIT v. S. Ajit Kumar [2008] 300 ITR 152 (Mad.); (v) Finally, the word "may" used in section 133A(3) (Hi) of the Act, viz., "record the statement of any person which may be useful for, or relevant to, any proceeding under this Act", as already extracted above, makes it clear that the materials collected and the statement recorded during the survey under section 133A are not conclusive piece of evidence by itself. For all these reasons, particularly, when the Commissioner and the Tribunal followed the circular of the Central Board of Direct Taxes ....
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...., it is evident that the ld. CIT(A) has restricted the disallowance on ad hoc basis. After considering the material placed before this Tribunal, we are of the considered view that when the inspection was carried out by the ESI and PF department, no discrepancy was reported in respect of rate of stipend and payment of stipend. The Assessing Officer has not placed any material suggesting that the number of trainees was not correct. Moreover, the Assessing Officer has based his finding on the basis of presumption that the assessee is not charitable institute than why it would provide training with stipend to the persons who would quit after training. This observation of the Assessing Officer is purely based on the conjecture and surmises, which cannot be the basis for making disallowance. If the Assessing Officer's reasoning is accepted, then it would make the assessee liable for prosecution for practicing the bonded labour. Therefore, this disallowance is unjustified and the same is hereby deleted." Accordingly, this ground of the revenue's appeal is dismissed. 16. Ground No. 2 of the revenue's appeal is against the decision made on account of deemed dividend. The ld. Sr.DR has....
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.... the bank as collateral security for enabling M/s Ratan Papers Pvt. Ltd. to take the benefit of bank limits. Further the assessee also provided the corporate guarantee to the bank to enable M/s Ratan Papers Pvt. Ltd. to enjoy the bank limit facility. In the course of survey proceedings the sum of Rs. 36,85,000/- given as security deposits by M/s Ratan Papers Pvt. Ltd. to the assessee company was treated as deemed dividend u/s 2(22) (e), but the circumstances and nature of transaction explained above does not come within the purview of section 2(22) because the phrase "by way of advance or loan" appearing in sub-clause (e) of section 2(22) of the I.T. Act, 1961, must be construed to mean those advances or loans which a shareholder or any concern in which such shareholder is a member or a partner and in which he has a substantial interest (hereafter in this reply referred to as the said concern), enjoys simply on account of being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten per cent of the voting power; but if such loan or advanc....
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....an afterthought because of the following: i) No such Security Deposit is there in the Audited Balance Sheet of the assessee company as on 31/03/2011. In the liability part one is share holders fund and other segment is Loan Funds (divided in secured loans, unsecured loans and deferred liability). ii) As per the assessee, the portion to be let out was for the monthly rent of Rs. 10,000/-. It cannot be believed that security deposit for that portion was Rs. 36,85,000/-. There is no basis of the so called security deposit. iii) On perusal of the letter dated 20/07/2009 of Indian Bank, Moti Lai Atal Road, Jaipur, it is observed that this is with regard to renewal of credit facilities for M/s Ratan Paper Pvt. Ltd. and the assessee company both (as mentioned under the head other liability of the group account M/s RTPL Renewed on 01.07.2009. iv) It cannot be said that M/s Ratan Paper Pvt. Ltd alone had availed benefit of corporate guarantee by the assessee because the assessee itself is also one of the beneficiary of the bank limits. It was also observed by the AO that: * The assessee is the beneficial owner of shares having more than ....
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.... in which the above decision was followed. (vii) It may be mentioned that the Hon'ble Rajasthan High Court in the case of CIT Vs Hotel Hilltop (Supra) held that: "From reading of section 2(22)(e) it is clear, that it comprehends manifold requirements, the first being, the payment should be made by way of loan or advance, to the concern. Of course on this aspect, the conclusion has been recorded by the Tribunal against the Revenue, but then on bare reading of the agreement and considering the totality of circumstances, including the very nature of the term 'security', and the fact, that substantial portion of this Rs. 10 lakhs of amount say more than 9 lakhs, have been advanced only during 7-1-91 to 22-3-91, it is difficult to accept, it as a security, in the sense of the term, as comprehended in the agreement, rather it clearly appears to be simply a nomenclature used, to borrow the words of the Assessing Officer 'transparent cover'. [Para 7] The more important aspect, being the requirement of section 2(22) (e) is, that "the payment may be made to any concern, in which such shareholder is a member, or the partner, and in which ....
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....s received a sum of Rs. 23.00 lacs from M/s. Japanwala Jewellers (P.) Ltd., Jaipur on the ground that it was towards share application money. The assessing authority after taking note of Sec. 2(22) (e) and available records observed that the share application money of Rs. 23.00 lacs received by the assessee company is in the nature of unsecured loan and further held to be the deemed dividend in the hands of assessee company as per provisions of Sec. 2(22] (e] of IT Act, 1961 and such deemed dividend was considered as income in the hands of the assessee. However, against the order of assessing authority, appeal came to be preferred before the Commissioner of Income-tax Appeals (I), Jaipur and the question was as to whether holding share application money of Rs. 23.00 lacs received from M/s. Japanwala Jewelers (P) Ltd. can be considered as unsecured loan and thereby considered as deemed dividend u/S. 2(22) (ej of the Act. However, the appellate authority taking note of the judgment of this Court in Hotel Hilltop case (supra) observed that deemed income cannot be taxed in the hands of non-shareholders namely the concern. As the concern can never receive dividend from the company, as d....
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....her the Directors of the appellant company are the share holders of the RPPL and the payment of the security deposit are made to the appellant company and not to share holders. Therefore, the provisions of Section 2(22)(e) of the Act is not applicable to the appellant company. In this regard, reliance is placed on the decision of the Hon'ble Jurisdictional High court in the case of CIT Vs. Hotel Hilltop (supra), wherein the Hon'ble High Court has held as under:- "From reading of section 2(22)(e) it is clear, that it comprehends manifold requirements, the first being, the payment should be made by way of loan or advance, to the concern. Of course on this aspect, the conclusion has been recorded by the Tribunal against the Revenue, but then on bare reading of the agreement and considering the totality of circumstances, including the very nature of the term 'security', and the fact, that substantial portion of this Rs. 10 lakhs of amount say more than 9 lakhs, have been advanced only during 7-1-91 to 22-3-91, it is difficult to accept, it as a security, in the sense of the term, as comprehended in the agreement, rather it clearly appears to be simply a nomen....
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....n both the appeals, the assessee and the revenue have taken following grounds of appeal: Grounds of assessee's appeal in ITA No. 528/JP/2016. "1. On the facts and in the circumstances of the case the Ld. CIT(A) has grossly erred in confirming the addition made in the assessment completed u/s 143(3) solely on the basis of statements recorded during the course of survey which stood retracted by the assessee through an affidavit filed by its director. Thus, the additions made solely on the basis of such retracted statements deserve to be deleted. 1.1 That, the Ld. AO has further erred in not accepting the affidavit given by the director of the assessee company without any basis and with the sole purpose to make additions without brining on record any corroborative material found during the course of survey or during the course of assessment proceedings, and also by completely ignoring the well established law that no addition can be made solely on the basis of statements recorded on oath during the course of survey conducted u/s 133A of the Act, when the assessee extended full cooperation. Thus, the assessment order deserves to be held bad ....
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.... claimed at Rs. 31,18,137/-, without any basis and without considering the submissions made by assessee and the evidences adduced in support of the genuineness of the expenses claimed by assessee. Thus, the disallowance of Rs. 6,23,627/- sustained by the Ld. CIT(A) deserves to be deleted. 4.1 Without prejudice to Ground of Appeal No. 01 to 04 and in the alternative, the Ld. CIT(A) has grossly erred in confirming further disallowance of Rs. 6,23,627/- out of the stipend expenses when the trading results are not accepted and the provisions of section 145(3) are invoked. 5. On the facts and in the circumstances of the case, the ld. CIT(A) has grossly erred in sustaining the addition of Rs. 45,795/- made by the ld. AO U/s 14A of the Income Tax Act, 1961 without recording any satisfaction inasmuch as no show cause notice was issued, thereby denying the opportunity of being heard on this issue. Thus, the action of the ld. A.O. and ld. CIT(A) deserves to be held bad in law and the addition so made deserves to be deleted" Grounds of revenue's appeal in ITA No. 596/JP/2016. "1. Whether on the facts and in the circumstances of the c....
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....n this aspect, no inquiry was made by the Assessing Officer. In our considered view, the Assessing Officer ought not to have based the assessment solely on the statements recorded during the course of survey, he should have brought material suggesting that no job work was done by the said firms. The Hon'ble Rajasthan High Court in the case of CIT, Udaipur Vs. Shri Roshan Lal Lodha in I.T. appeal No. 185/2014 order dated 03/11/2015 has held as under:- "In the case aforesaid, Hon'ble Apex Court held that Section 133-A of the Income Tax Act does not empower Income Tax officer to examine any person on oath; hence, the statement recorded under Section 133-A has no evidentiary value and any admission made during such statement cannot be made basis of addition. The appeal preferred by the revenue before the Income Tax Appellate Tribunal came Lo be dismissed by the judgment impugned. Learned counsel appearing on behalf of the appellant submits that the assessee in the instant matter did not retract from his statement, therefore, the law laid down in the case of S. Khader Khan Son (supra) is not applicable. We do not find any merit in the argument adv....
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....mining minimum or maximum amount of stipend. * Various discrepancies are noticed in the salary/wages sheets. * Out of list of 147 trainees submitted by the appellant, the AO noted that 50% of the mobile numbers were either wrong or incorrect * Out of the 10 trainees required by the AO to produce (who were working during different periods), only 3 were produced before the AO. (vii) It is noted that the AO has just ignored the various documentary evidences filed by the appellant including the attendance sheets of the trainees, retraction by Shri Naresh Kumar Jain, copies of the complete set of appointment documents of each trainee consisting of applications made by the individuals for being appointed as trainee in the appellant, along with his bio data, qualification , address / identity verification , and the appointment letter issued by the appellant mentioning therein the date of joining, initial salary and job details, attendance register, showing the daily attendance of each trainee along with factory in and out time , on the basis of which monthly stipend payment is done, along with copy of entry card of each trainee. Copy of monthly stipend ....
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....one has evidentiary value as contemplated under law, vide Paul Mathews and Sons v. CIT [2003] 263 ITR 101 (Ker.); (iii) The expression "such other materials or Information as are available with the Assessing Officer" contained in section 158BB of the Income-tax Act, 1961, would include the materials gathered during the survey operation under section 133A, vide CIT v. G. K. Senniappan [2006] 284 ITR 220 (Mad.); (iv) The material or information found in the course of survey proceeding could not be a basis for making any addition in the block assessment, vide decision of this court in T. C (A) No. 2620 of 2006 (between CIT v. S. Ajit Kumar [2008] 300 ITR 152 (Mad.); (v) Finally, the word "may" used in section 133A(3) (Hi) of the Act, viz., "record the statement of any person which may be useful for, or relevant to, any proceeding under this Act", as already extracted above, makes it clear that the materials collected and the statement recorded during the survey under section 133A are not conclusive piece of evidence by itself. For all these reasons, particularly, when the Commissioner and the Tribunal followed the circular of the Central Board....
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..... The Assessing Officer asked the assessee to explain as to why disallowance U/s 14A should not be made on this income. The Assessing Officer observed that there cannot be any separation with regard to day to day investments out of the bank accounts what which part pertain to the interest bearing funds and which part not. Therefore, he disallowed Rs. 45,795/- U/s 14A of the Act. 22. The ld. CIT(A) sustained the addition by holding as under:- "I have duly considered the assessment order and the other material placed on record. The issued has been discussed by the AO in para 37 of the assessment order wherein it was stated by the AO that the appellant has received dividend income of Rs. 40,353/- and it has debited interest expenses of Rs. 44,74,970/- in its P&L Account. During assessment proceedings, the appellant was required to explain why disallowances u/s 14A should not be made on account of income which do not form part of the income. It was stated by the appellant that the investment was made out of non interest giving funds and therefore, no disallowances can be made. The AO after examining the matter, made disallowance of Rs. 45,795/- u/s 14A of the Act. During th....
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....e and surmises, which cannot be the basis for making disallowance. If the Assessing Officer's reasoning is accepted, then it would make the assessee liable for prosecution for practicing the bonded labour. Therefore, this disallowance is unjustified and the same is hereby deleted." Accordingly, this ground of the revenue's appeal is dismissed." "18. We have heard the rival contentions of both the parties, perused the material available on the record and also gone through the orders of the authorities below. The ld. CIT(A) has elaborately examined this issue in his order and decided the same by holding as under:- "3.3.2 Determination: (i) I have duly considered the assessment order, submissions of the appellant and the material placed on record. During the year under consideration the appellant company received a sum of Rs. 36,85,000/- from M/s Ratan Papers Pvt. Ltd. as per the following details: Date Amount (In Rs.) 08.01.2010 20,00,000/- 05.02.2010 5,50,000/- 24.02.2010 11,35,000/- Total 36,85,000/- (ii) The AO has treated the above amount of Rs. 36,85,000/- as deemed dividend u/s 2(22) (e) of the Act....
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....lding not less than ten per cent of the voting power; but if such loan or advance is given to such shareholder or any concern in which such shareholder is a member or a partner and in which he has a substantial interest as a consequence of any further consideration which is beneficial to the company received from such a share-holder or said concern, in such case, such advance or loan cannot be said to be deemed dividend within the meaning of the Act. Thus, gratuitions loan or advance given by a company to those classes of shareholders or any concern in which such shareholder is a member or a partner and in which he has a substantial interest would come within the purview of section 2(22) but not cases where the security deposits offered by tenant is given in return to an advantage conferred upon the company by such shareholder or any concern in which such shareholder is a member or a partner and in which he has a substantial interest. The assessee M/s Ratan Textiles Pvt. Ltd. had substantial interest in M/s Ratan Papers Pvt. Ltd. through its shareholders. The assessee permitted its immovable property to be mortgaged to the bank for enabling the tenant company (RPPL) ....
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....hat: * The assessee is the beneficial owner of shares having more than 10% of the voting power in the company, M/s Ratan Papers Pvt. Ltd. * The assessee during the year under consideration has taken loan from M/s Ratan Papers Pvt. Ltd, claiming the same as security deposit. * From the copy of account of the assessee in the books of M/s Ratan Papers Pvt. Ltd. it is appearing that there is a debit balance of Rs. 36,85,000/-. (iv) In view of the above facts, the AO invoked the provisions of section 2(22)(e) of the Act and made addition of Rs. 36,85,000/- to the income of the appellant company. (v) Before proceeding further, it would be appropriate to mention the share holding pattern of both the companies i.e. RTPL and RPPL as on 31.03.2010 as under: Ratan Textiles Pvt. Ltd. 31.03.2010 Ratan Papers Pvt. Ltd. 31.03.2010 Name o the share holder No. of shares %of share holding Name of the share holder No of shares %of share holding Dinesh Ku. Jain HUP 100 Savita jain 1 Savita Jain 100 Sunit Jain 95 9.5% Gaurav Jain 20100 24.75% Sapna Jain 1  ....
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....ny concern, in which such shareholder is a member, or the partner, and in which he as substantial interest, or any payment by any such company, on behalf, or for the individual benefit of any such shareholders Thus, the substance of the requirement is, that the payment should be made on behalf of, or for the individual benefit of any such shareholder. Obviously, the provision is intended to attract the liability of tax on the person, on whose behalf, or for whose individual benefit, the amount is paid by the company, whether to the shareholder, or to the concern firm, in which event if would fall within the expression 'deemed dividend'. Obviously, income from dividend, is faxable as income from of her sources, under section 56, and in the very nature of things, the income has to be, of the person earning the income. The assessee in the instant case is not shown to be one of the persons, being shareholder. Of course the two individuals being partners of the assessee-firm are the common persons, holding more than requisite amount of shareholding, and are having requisite interest, in the firm, but then, thereby the deemed dividend would not be deemed dividend in the hands of ....
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....ly the concern. As the concern can never receive dividend from the company, as dividend is paid only to the shareholders, benefit of set off as per section 2 (22) (e)(iii) cannot be allowed to the concern and further observed that substance of the requirements of provisions of the Act is that the payment should be made on behalf of or for any individual benefit of any such shareholders and further observed that the proceedings which have been initiated against the person /shareholder for whose individual benefit the amount was paid by the company and deemed income is taxable under the head 'income from other sources' and accordingly it should be taxed in the case of the individual and the assessee being not a shareholder is not one of the persons and Shri Ramsharan Gupta is beneficiary shareholder having requisite interest in the assessee company as well as other concern and accordingly such deemed dividend should have been considered in the hands of the individual Ramsharan Gupta and not in the hands of the assessee company. 3. Against the order of Commissioner of Appeals, the revenue preferred appeal before the ITAT and placing reliance on the judgment referred t....
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....as comprehended in the agreement, rather it clearly appears to be simply a nomenclature used, to borrow the words of the Assessing Officer 'transparent cover'. [Para 7] The more important aspect, being the requirement of section 2(22) (e) is, that "the payment may be made to any concern, in which such shareholder is a member, or the partner, and in which he as substantial interest, or any payment by any such company, on behalf, or for the individual benefit of any such shareholders Thus, the substance of the requirement is, that the payment should be made on behalf of, or for the individual benefit of any such shareholder. Obviously, the provision is intended to attract the liability of tax on the person, on whose behalf, or for whose individual benefit, the amount is paid by the company, whether to the shareholder, or to the concern firm, in which event if would fall within the expression 'deemed dividend'. Obviously, income from dividend, is faxable as income from of her sources, under section 56, and in the very nature of things, the income has to be, of the person earning the income. The assessee in the instant case is not shown to be one of the p....
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....133A of the Act, when the assessee extended full cooperation. Thus, the assessment order deserves to be held bad in law and the additions made thereunder deserve to be deleted. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has grossly erred in upholding the application of provisions of section 145(3) of the Income Tax Act, 1961 without appreciating the fact that the Ld. AO had miserably failed to point out any material defect in the books of account of assessee. Thus, the action of Ld. AO in rejecting the books of account of assessee u/s 145(3) deserves to be held bad in law. 2.1 That, the Ld. AO and the Ld. CIT(A) has further erred in rejecting the books of account of assessee u/s 145(3) solely on the basis of the allegation that the job work charges and stipend paid by assessee are unverifiable/unjustified by completely ignoring the submissions made and evidences adduced in order to establish the genuineness of the expenses incurred by the assessee. Thus the Ld. AO has failed to reach the satisfaction that true profits cannot be deduced from the books of account of assessee, hence the action of Ld. AO in invoking the provisions....
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.... "9. We have heard the rival contentions of both the parties and perused the material available on the record. There is no dispute with regard to the proposition that statements recorded during the course of survey has no evidentiary value. Such statements if retracted by the assessee would shift the onus on the Assessing Officer to prove the contents of the statement as correct by placing material corroborating the correctness of such statements on record. In the present case, the Assessing Officer has based his findings solely on the basis of the contents of the statement recorded during the course of survey. No other material is gathered suggesting that the statements were not correct. As per the assessee, one of the firm M/s Kalpana Impex is registered with ESI and deducting contribution and depositing the same to the concerned authority. The Assessing Officer was required to make inquiry on these contents merely because the statement is recorded during the course of survey and such statements stated a fact which is required to be further corroborated with a plausible evidence. We find that the assessee has enclosed details of contractors from whom it had got the wor....
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....facts of the present case, the authorities below were no justified in making the addition on the basis of the statement recorded during the course of survey. No other material suggesting that the claim of the assessee was false, is brought on record by the revenue. Under these facts and in view of the binding precedent, we are unable to confirm the finding of the ld. CIT(A). Therefore, we direct the Assessing Officer to delete the trading addition of Rs. 25.00 lacs. Grounds No. 1 to 3.1 of the assessee's appeal are disposed off in terms of the above." 12. We have heard the rival contentions of both the parties and perused the material available on the record. The ld. CIT(A) has decided the issue by observing as under:- "(v) It is noted from the above details that during the course of survey u/s 133A of the Act, Shri Naresh Jain, the Director of the appellant company surrendered a sum of Rs. 50 lac, out of total expenditure of Rs. 95,41,465/- claimed by the appellant from FY 2006-07 to 2009-10 as per following details: F.Y. Amount 2006-07 Rs. 10,55,585/- 2007-08 Rs. 27,37,958/- 2008-09 Rs. 30,85,592/- 2009-10 Rs. 26,66,320/- T....
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....s to trainees cannot be the grounds for disallowing 75% of the stipend expenses claimed by the appellant. (viii) It may be mentioned that in the case of CIT Vs Shri Roshan Lai (Supra), it has been held by the Hon'ble Rajasthan High Court 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 it was held by the Hon'ble High Court of Madras that: "From the foregoing discussion, the following principles can be culled out: (i) An admission is an extremely important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect and that the assessee should be given a proper opportunity to show that the books of account do not correctly disclose the correct state of facts, vide decision of the apex....