TaxTMI 
TaxTMI 
2021 (4) TMI 529
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....in confirming the addition made by the Ld. A.O. only on the basis of disclosure made during the survey conducted u/s. 133A of the I.T. Act rejecting the facts and explanation offered by assessee on the very material found during the survey. (3) On the facts and Circumstances, the Honorable CIT(A)-II has erred in rejecting the additional Evidences produced by the assessee. (4) On the facts and in the circumstances of the case and in law the addition stated above deserve to be deleted, hence, it is prayed to your honour to delete the same and do the justice. (5) The appellant craves leave to add, alter or vary any of the grounds of appeal." 2. Brief facts of the case are that the assessee is a partnership firm engaged in the business of development of land and building. A survey action was conducted on 05.07.2011, under section 133A of Income Tax Act on the business premises of assessee. During the course of survey action certain incriminating documents were found in possession of partners of assessee firm, which was impounded by survey party as Annexure-BF-16(BI-1) and BF-17(BI-2). The statement of one of the partner of assessee firm namely Shri Divyang....
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....80 Ughrani baki" meaning thereby 280 total to be receivable. Actual gross receivables as per this paper shall be Rs. 2,80,00,000/-. The receivables are gross receipts of unaccounted business transaction. Assessee has voluntarily shown net profit from these transaction in the return of income amounting to Rs. 4,00,00,000/-. Net profit of Rs. 4 Crore shown in ITR for F.Y. 2011-12. 4. The aforesaid explanation furnished by assessee was not accepted by Assessing Officer. The Assessing Officer held that during the survey, the statement of partner was recorded on oath. The partner disclosed unaccounted income of Rs. 10.78 Crore as net income for A.Y. 2012-13. The partner also affirmed that no other expenses or deduction would be claimed. The other partners of the firm also endorsed the correctness of the statement. The Assessing Officer further held that assessee has not explained the basis for stating that disclosed income during the survey and also arriving at the net income which according to the assessee offered for taxation. No documentary evidences of corresponding expenses incurred in arriving the net income is filed. Accordingly, the Assessing Officer on the basis of above ....
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....he time of recording the statement of partner, they were under the impression that transaction recorded in the impounded paper is net unaccounted profit, which is actually gross business receipts. The assessee also relied on certain case law on the ratio that there is no evidentiary value of the statement recorded during survey action under section 133 of the Act. 8. The contention/explanation furnished by assessee was not accepted by the Assessing Officer. The Assessing Officer held that the assessee has not disputed the fact about the incriminating evidence specifically page No. 12, 17 & 18 of Annexure-BF-1/B1-2 of the impounded documents. The assessee has not disputed the writing on these three papers. The submission of the assessee that partners realized their mistake that the disclosure was made on the basis of business receivables which is gross receipt of unaccounted transaction was also not accepted by Assessing Officer. The assessing officer held that the partner of the firm specifically and categorically stated that the figures in the coded form against the name of the partners of the firm are the net profit of the firm or the quarter ending on June, 2011. However, the....
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....o years is an afterthought. It was also held that in normal circumstances, the appellant realizes mistake immediately and would have not waited for two years. The admission is an important piece of evidence. The burden to prove that statement was obtained by pressure or intimidation was on the assessee. The assessee claimed that he made statement under the mistaken belief of fact or law and that retraction should be made at the earliest opportunity. The ld. CIT(A) further held that assessee fails to produce the evidence with regard to the expenditure for verification before the Assessing Officer, despite several opportunity. Thus, the assessee failed to discharge the burden regarding the expenditure. The partner of assessee made discloser of unaccounted income on the basis of document and the loose papers found and impounded from their premises. Shri Divyang Mandviwala is an active partner of the business and was well-informed of the nature of business and the documents/papers lying at his premises. The disclosure statement was made after consulting the books of accounts. On the submissions of assessee that the assessee incurred expenses on the receivable, the Ld. CIT(A) held that ....
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....e page in lakhs and those are unaccounted business receivable, the summary was explained to that of Rs. 9.75 crore. The partner further admitted in answer to question number 33 that difference of cash founded as per books amounting to Rs. 7,86,857/- was unaccounted cash of assessee form. Further in answer to question number 34 partner admitted unaccounted total income of firm of Rs. 10.78 crore. Later on the assessee realised their mistake that they had disclosed gross receipt of income as net income for the year under consideration. The assessee filed return of income on 27th September 2013 showing total income at Rs. 4.00 crore. During the assessment the assessee requested to the assessing officer to provide the copy of statement of partner recorded by survey team. The copy of the statement of partner namely Divyang Mandviwala was provided to the assessee's representative. On receipt of statement of partner, the assessee immediately filed retraction affidavit, explaining the fact that at the time of survey action regarding gross receipt were taken as net received. Learned Senior Counsel further submitted that during the course of survey not even a single document found which ....
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.... in the form of on money on the basis of material found and seized during the course of search". The learned Senior Counsel submits that Hon'ble High Court while deciding the said question No. 2 held that Tribunal has rightly considered that in absence of any financial record or account being maintained by the respondent-assessee, the profit earned by the respondent-assessee for the block assessment was presumed to be more than 8% as per the provisions of section 44AD of the Act. Further, the contention of revenue was not accepted that no account has been maintained on nothing to substantiate the amount of expenditure incurred by the respondent-assessee was shown. The learned senior counsel submits that the ratio of case law in Kishore Mohanlal Telwala is a squarely in applicable on the facts of the present case. 14. To buttress his submissions, the Senior Counsel of the assessee also relied upon the following decisions: 1 Gujarat High Court in case of Shardaben K Modi in Tax Appeal No. 123 of 2013 dated 30.04.2013 2 Hon'ble Kerala High Court, in case of Paul Mathews & Sons Vs CIT (2003) 263 ITR 101 (Kerala), 3 Supreme Court in CIT Vs S. Khader....
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.... order of the lower authorities. The ld. DR for the revenue further submits that during the survey action certain incriminating material in the form of various documents was found at the premises of assessee. The documents were inventorised and seized. During the course of survey proceeding, the statement of one of the partner of assessee was recorded, in the statement the said partner disclosed unaccounted income of Rs. 10.78 crore as income for the assessment year under consideration. In the statement, the partner affirmed that no other expenses, deduction will be claimed from the unaccounted income disclosed during the course of survey. During the assessment, the assessing officer noted that the assessee had not disputed that the sum written on these pages are in coded forms, i.e. three digits were actually stand for Crores. In reply to various questions, the partner submitted a revised explanation and stated that actual figure written on these documents is Rs. 9.75 Crore. During the assessment, the assessing officer asked the assessee to provide the complete PAN, name and address from whom, this Rs. 9.75 crore is receivable. The assessee in its reply dated 3rd March 2015, befor....
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....fact that they have actually incurred any expenses. The assessee is making inconsistent statement which is far from truth. The assessee failed to produce any evidence in the form of bills, voucher to establish that expenditure had been incurred to earn the undisclosed income, which required to be set off against the claim of alleged gross receivable. The netting of income out of unaccounted income disclosed is not allowable under the law. Even otherwise the assessee has not disclosed that what type of expenditure incurred by the assessee, either before the assessing officer or before first appellate authority. The assessee failed to bring any iota of evidence of the expenses incurred for earning such undisclosed receivable income. The ld. DR for the revenue prayed for dismissing the appeal of the assessee. 18. We have considered the rival submissions of the learned counsel and representatives of parties and have again gone through the orders of the lower authorities. We have also deliberated on each and every case law relied by ld. Sr. Counsel for the assessee. The assessing officer while passing the assessment order made addition of Rs. 6.78 Crore by holding that during the sur....
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....ncome which was confirmed by two other partners and their CA. The claim of assessee with regard to undisclosed textile business/sarees business and profit of Rs. 4 Crore on unaccounted business receivable of Rs. 9.76 Crore giving a profit @ 41% in unimaginable and rejected the additional ground raised by the assessee. 20. On the primary contention of the assessee that the partners of the assessee made statement of gross business receivable, the learned CIT(A) held that while making statement in the survey proceeding the partners specifically stated that the amount is distributed among the partners are unrecorded and unaccounted receivables of the firm. The statement of partner of assessee was recorded in the presence of Chartered Accountant. The professional advice was available to the assessee at the time of recording the statement. The admission made in the statement is an important piece of evidence. The assessee filed return of income after one year and has paid tax of Rs. 2.10 Crore till 29.03.2013 which is more than 50% of total income returned, which clearly indicates that income was reduced while filing return of income. It was also held that no plausible explanation was....
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....declared in the presence of CA, paid advance tax to the extent of Rs. 2.10 Crore. No retraction was made despite the fact that statement made during the survey was made in the presence of well known CA. The same CA prepared the Audit report. There is no dispute about the legal position by various High Courts that the survey team has no authority to record the statement of person on oath, and the statement recorded during survey is per se not admissible in the evidence. 22. Being last fact finding authority, we have also examined the entire facts of the case and material placed before us very carefully. There is no dispute that during the survey action on 05.07.2011, the partner of the assessee declared additional undisclosed income of Rs. 10.78 Crore. It was also stated in the statement that it is the net income of assessee and that no expenses against the said undisclosed income would be claimed. At the cost of repetition, we retreat that there is no dispute about the legal position that the survey team has no authority to record the statement of person on oath, meaning thereby the statement recorded during survey is per se not admissible in the evidence. However, in the presen....