TaxTMI 
TaxTMI 
2021 (5) TMI 651
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....e and applicable law, Ld. CIT(A)-I, Bhopal erred in sustaining the addition of Rs. 1,59,19,451/- made by the Ld. AO on account of unexplained stock of gold and silver jewellery disregarding the facts of the case, settled legal position and explanation submitted by the appellant. 3. On the facts and circumstances of the case and applicable law, Ld. CIT(A)-I, Bhopal erred in dismissing the appeal and sustaining the addition of Rs. 3,75,510/- made by the Ld. AO on account of undisclosed cash found during survey disregarding the facts of the case, settled legal position and explanation submitted by the appellant. 4. On the facts and circumstances of the case and applicable law, Ld. CIT(A)-I, Bhopal erred in dismissing the appeal and sustaining the addition of Rs. 1,00,145/- made by the Ld. AO on account of unexplained expenditure disregarding the facts of the case, settled legal position and explanation submitted by the appellant. 5. On the facts and in the circumstances of the case, the Ld. CIT(Appeals)-I, Bhopal erred in sustaining the levy of interest u/s. 234A, 234B & 234C of the Act, whereas no such interest is chargeable 6. On the facts and in ....
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..... A.O. and he completed the assessment assessing income at Rs. 1,75,40,496/- in the following manner:- Income as per return Rs. 11,45,390/- Addition on account of undisclosed stock u/s 69B Rs. 1,70,24,352/- Less: undisclosed stock offered under the head profits and gains of business profession Rs. 11,04,901/- Add: Undisclosed cash found during the course of survey Rs. 3,75,510/- Add: Addition on account of unexplained expenditure Rs. 1,00,145/- Assessed Total Income Rs. 1,75,40,496/- R/o Rs. 1,75,40,500/- 5. Aggrieved assessee preferred appeal before Ld. CIT(A) but could not succeed. Though the detailed submissions were made before Ld. CIT(A) also but he on the strength of judicial precedents and on the strength of the statement given by the assessee during the course of survey was of the view that assessee should have ....
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....er gram] 2,66,366 [108.732 grams x Rs. 2,450 per gram] Excess Silver jewellery 28,85,500 [99.50 kgs x Rs. 29,000 per kg] 20,46,965 [70.585 kgs x Rs. 29,000 per kg] 8,38,535 [28.915 kg x Rs. 29,000 per kg.] Surrender without details 1,00,138 1,00,145 - TOTAL 1,75,00,000 1,63,95,099 11,04,901 Ld. AD relying on the surrender during survey u/s. 133A added Rs. 1,63,95,099/- as unaccounted income of the assessee. This order was confirmed by Ld. CIT(A). However, both the Id. Authorities brushed aside the reasons for retraction. The surrender was made under mistake and the reasons for retraction were specific. The reasons for retraction in respect of each head of disclosure, are as under: • Excess Cash [Covered in Ground no. 3] - Rs. 3,75,510/- Chart 2 Particulars Cash found Cash as per books Excess cash As per Id AO Rs. 8,34,120/- Rs. 4,58,610/- Rs. 3,75,510/- As per assessee Rs. 4,58,610/- Rs. 4,58,610/- NIL. It is submitted that cash found was Rs. 4,58,610. PB 29 is the Inventory of cash found during the course of sur....
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.... PB41. (iii) In regard to the purchases and sale of gold jewellery between 01.04.2015 to 15.12.2015, the details of month-wise purchases and sales are given at PB 30. Stock register is at pg. 6-11 of Synopsis. The purchase of gold jewellery during 01.04.2015 to 15.12.2015 is 6388.660 grams as per the trading account (PB 52). AII the entries of purchases can be verified from PB 53, where details of each purchase is given. The purchases of gold jewellery are from one party (Silver Gold Point'. The ledger account of (Silver Gold Point' is at PB 64-65. It can be seen that the payment for all purchases were made through banking channel, before the date of survey. The last bill is dated 09.12.2015, the payment of which was also made on 07.12.2015 Le. before date of survey. The sale of gold jewellery during 01.04.2015 to 15.12.2015 was 6962.740 grams. The ledger for sales is at PB 54-57. The sales have been accepted by department and the profit on same has been accepted. - The sales are also subject to VAT. Invoices have been issued, which were verifiable during survey. How the survey party calculated the stock as per ....
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.... on same has been accepted. - The sales are also subject to VAT. Invoices have been issued, which were verifiable during survey. - How the survey party calculated the stock as per books at 137.000 kgs is unknown. What quantity was taken as opening stock, purchases, and sales between 01.04.2015 to 15.12.2015 is not on record. (iv) Thus, it is submitted that since opening stock, purchases and sales were verifiable, the correct stock as per the books was 207.585 kgs. (3) Surrender without details [Covered in Ground no. 4] - Rs. 1,00,145/- There is no basis for this surrender. It is submitted that it is a trite law that surrender without any basis cannot be a basis of making addition in the hands of the assessee. Assessee places reliance on the judgment of Hon'ble ITAT, Indore Bench in the case of Ajit Singh Malhotra vs. ACIT {Central}, IT{SS}A 63/IND/2019, order dated 22.10.2020, whereby the Hon'ble ITAT has held that no addition can be made merely on the basis of statement recorded during search. It is further submitted that, the present case is on a much better footing, as the statement was recorded during survey u/s. 133....
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....uring the survey and Rs. 1,00,145/- made on account of unexplained expenditure. We find that the survey action was conducted at the business premises of the assessee firm on 16.12.2015 and surrender of Rs. 1,75,00,000/- was made by the partner of the firm on account of following:- Particulars Amount (Rs.) On account of alleged excess stock of gold jewellery weighing 5770.96 grams found. 1,41,38,852 On account of alleged excess stock of silver jewellery weighing 99.50 kilograms found. 28,85,500 On account of alleged excess cash found 3,75,510 Un detailed surrender on account of other discrepancies (if any) 1,00,138 Total 1,75,00,000 11. Subsequently in the return of income filed on 16.12.2016 assessee offered only Rs. 11,04,901/- as undisclosed income found during the course of survey. For the remaining amount retraction statement was filed on 03.06.2017 contending that after reconciliation of the stock records and other documents and also after reconciling various figures connected to stock and cash it was o....
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....akes it clear that the materials collected and the statement recorded during the survey under section 133A are not conclusive piece of evidence by themselves. The statement obtained under section 133A would not automatically bind upon the assessee. Section 133A does not empower any ITO to examine any person on oath., In contradistinction to the power under section 133A. section 132(4) enables the authorized officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the Income-tax Act. On the other hand whatever statement is recorded under section 133A is not given an evidentiary value. The statement obtained under section 133A would not automatically bind upon the assessee. Therefore admission made during such statement cannot be made the basis of any addition. " The scope 'of section 132(4) and section 133A [with regard to recording of statement of any person on oath] has been considered at length by Hon'ble High Court of Kerala in the case of Paul Mathews and Sons v. CIT [2003] 263 ITR 101 [Kerala] Relevant findings of Hon'ble Court are reproduced hereunder: "....
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...."Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course 0f the search and seizure and survey operations. Such confessions is not based upon credible evidence are later retracted by the concerned assessees while filing returns of income. In these circumstances on confessions during the course of search and seizure and survey Operations do not serve any useful purpose. It is therefore advised that there should be focus and concentration on collection O evidence O income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income-tax Department Similarly while recording statement during the Course of search and seizure and survey operations no attempt should be made to obtain confession as to the undisclosed income. An action on the contrary shall be viewed adversely. Further in respect of pending assessment proceedings also the Assessing Officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment 'orders. " 17. From perusal of....
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....urvey. The claim of the assessee is that it is 20580.468 grams. Following Trading account for the period 1.4.2015 to 15.12.2015 has been filed and placed at page 52 of the paper book:- Particulars Quantity Amount Particulars Quantity Amount To Opening stock To Purchases 21,154.55 6,388.66 4,19,60,444.87 1,64,53,849.00 By Sales By Closing stock 6,962.74 20,580.47 1,96,64,655.00 4,41,71,188.99 To Gross Profit 54,21,550.12 Total 27,543.21 6,38,35,843.99 Total 27,543.21 6,38,35,843.99 22. In the above trading account the figure of opening stock is verifiable from the balance sheet of preceding financial year i.e. 2014-15 and the same is rightly taken as 21154.55 grams. Closing stock i.e. stock on the date of survey is mentioned 20580.47 grams but physical stock found was 20689.200 grams and difference of 108.732 grams of gold jewellery is offered to tax by the assessee. Now the remaining two figures are purchase and sales. Complete details of purchase of gold jewellery of ....
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....to tax in the return of income filed u/s. 139 of the Act no addition was called for unexplained silver jewellery at Rs. 20,46,965/- by the Ld. A.O. and the same is deleted. In the result addition for excess gold jewellery and silver jewellery at Rs. 1,59,19,451/- (Gold Jewellery Rs. 1,38,72,459/- and Silver Jewellery Rs. 20,46,965/-) stands deleted and Ground No. 2 of the assessee's appeal is allowed. 24. Now we take up Ground No. 3 for the addition for excess cash of Rs. 3,75,510/- made by the Ld. A.O. Ld. A.O. made this addition after observing that physical cash was found at Rs. 8,34,120/- which was in excess by Rs. 3,75,510/- against the cash as per books at Rs. 4,58,610/-. Ld. Counsel for the assessee claimed that the physical cash as on the date of survey is Rs. 4,58,610/- only and therefore there is no excess cash. On perusal of page 29 of the paper book relating to the inventory of cash found at the assessee's business premises the document shows that total cash found at the time of survey was Rs. 4,58,610/- only. This inventory of cash found is signed by the Officer present during the course of survey. Thus it remains undisputed that physical cash found at the t....