TaxTMI 
TaxTMI 
2021 (7) TMI 11
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....the outset that all these Revenue's six appeals seeks to revive Assessing Officer's action inter alia adding additional income amount(s) of Rs. 2 Crores in ITA No.743/Hyd/2018 on "substantive" basis in ITA No.743/Hyd/2018, Rs. 1.5 Crores each on protective basis in ITA Nos.747 to 750/Hyd/2018 and Rs. 7 Crores in ITA No.752/Hyd/2018 on "substantive basis"; respectively made in the corresponding assessment orders and deleted in the CIT(A)'s detailed discussion in lead case ITA No.743/Hyd/2018, reading as under: "2. The appellant has filed the return of income on 16.03.2015 by disclosing an income of Rs. Nil for the Asst. Year 2013-14. The assessment was completed by determining the total income of Rs. 2,00,00,000/- under the following heads of income: i) Income returned Nil ii) Add: Income admitted 2,00,00,000 Total: 2,00,00,000 3. Against the above order the appellant has filed an appeal by raising the following grounds: GROUNDS OF APPEAL 1.The assessment order passed by the Assessing officer is against the facts of the case. 2.The assessing officer erred in making an addition of Rs. 2,00,00,000/- merely on the basis of the statement given by the Managi....
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....e and officers concerned in poor light. 2. I am further directed to invite your attention to the Instructions / Guidelines issued by CBDT from time to time, as referred above, through which the Board has emphasized upon the need to focus on gathering evidences during Search/Survey and to strictly avoid obtaining admission of undisclosed income under coercion/undue influence. 3. In view of the above, while reiterating the aforesaid guidelines of the Board, I am directed to convey that any instance of undue influence/coercion in the recording of the statement during Search/Survey/Other proceeding under the I.T.Act,1961 and/or recording a disclosure of undisclosed income under undue pressure/ coercion shall be viewed by the Board adversely. 4. These guidelines may be brought to the notice of all concerned in your Region for strict compliance. 5. I have been further directed to request you to closely observe/oversee the actions of the officers functioning under you in this regard. 6. This issues with approval of the Chairperson, CBDT (K. Ravi Ramchandran) Director (Inv.)-II, CBDT Confession of Additional income during the course of search & seizure and survey operation.....
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....sment order and filing the replies to the issues raised by the assessing officer. BRIEF NOTE ON FACTS OF THE CASE The appellant firm M/s.Legend Developers & Constructions, Kurnool is a Partnership firm formed on 09.04.2008 to do business in Real Estate. The appellant is constituted with the following partners namely 1] Sri. A.Jayaramudu 2] Smt. B. Mangala 3] Sri. K.E. Jayachandrudu 4] Sri. K.S. Narayana Gupta and 6] Sri. R. Aravind Kumar Jain. The partners have executed a Partnership deed on 09.04.2008. The partnership firm has purchased 12.24 Acres of Ariculture land at Tadipatri, Anantapur dist. with an intention to develop the said land and divided into residential house plots and sale of the same. The appellant has got approval of 144 residential house plots from the municipality of Tadipatri. The appellant firm has sold approved house plots since from the year 2008-2009 and has filed Income tax returns regularly by disclosing the income from the partnership business for the Asst. Year 2009-2010, 2010-2011, 2012-2013 and 2013-2014. The appellant firm has sold the house plots and received sale consideration as mentioned below. Sl. No. F.Y. Asstt. Year Number of p....
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....fusing state of mind and under stress and the statement was given under pressure and in odd hours. The appellant firm submits that there was no any evidence or incriminating material found in survey operations at the firms office premises. Even the assessing officer has not mentioned concealment of income or suppression of receipts (or) inflation of expenditure (or) undisclosed investments etc by the firm during the financial year 2012-2013 relevant to the assessment year 2013-2014. It is a fact that the appellant firm has made sale of only one plot and received sale value of Rs. 1,96,000/- in the financial year 2012-2013 and no other income earned in the said assessment year 2013-2014. Hence the addition of Rs. 2,00,00,000/- in the hands of the appellant is not justified and not valid in law. The appellant firm is referring latest CBOT circulars No. F.No. 286/98/2013-IT(INV./I) Dt. 18.12.2014 particularly clarifying "on the admission of undisclosed income under coercion / pressure during search / survey. The Para No.3 of the circular clearly stated that "In view of the above, *while reiterating the aforesaid guidelines of the board, I am directed to convey that any instance ....
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....f the appellant to the issues. ISSUES RAISED BY THE ASSESSING OFFICER AND SUBMISSION OF THE APPELLANT ISSUE NO.1 OFFERING OF ADDITIONAL INCOME AT THE TIME OF SURVEY OPERATIONS: The assessing officer has mentioned at Page No.4, Para No.2.1 of the Assessment order that, "Sri, A. Jayaramudu came up with a decision and filed a letter with a plan to split up the additional income of Rs. 10,00,00,000/- which he declared in his statement recorded under section 131 of the IT Act on 03.12.2013". He has agreed to offer the income of two crores in the hands of the appellant firm for the Asst.Year 2013-2014. SUBMISSION OF THE APPELLANT The appellant firm submit that, the partner Sri. A. Jayaramudu has agreed to disclose Rs. 2,00,00,000/- income for the Asst. Year 2013-2014 in the hands of the appellant firm under confusing state of mind. In fact, the appellant firm has sold 1 plot only for Rs. 1,96,000/- in the F. Y. 2012-2013. The appellant firm has earned a net profit of Rs. 9,307/- for the financial year 2012-2013 relevant to the asst. year 2013-2014. The assessing officer "has not found any evidence and incriminating material and undisclosed income and suppression of sales an....
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....of accounts of the firm for the F.Y.2012-2013 relevant to the Asst. Year 2013-2014, the firm has earned net profit of Rs. 9,307/- only. The appellant firm has sold only one plot for Rs. 1,96,000/- during the F. Y. 2012-2013 relevant to the Asst. Year 2013-2014. The appellant firm partner Sri. A.Jayaramudu has offered income of Rs. 2,00,00,000/- in the hands of the appellant for the Asst. Year 2013-2014. The appellant firm, as per the books of accounts earned net profit of Rs. 9307/- for the F.Y. 2012-2013 relevant to the Asst. Year 2013-2014. These was no any reason for offering the income of Rs. 2,00,00,000/- in the hands of the appellant in the absence of any material or incriminating materials / records found in the survey operations. The offering of income of Rs. 2,00,00,000/- is not supported with any evidences. Hence the offering of income Rs. 2,00,00,000/- by the appellant firms partner was under pressure and under confusing state of mind during the course of recording of sworn statement. Hence the addition of Rs. 2,00,00,000/- is not justified and is against CBDT circulars issued by the department in reference to confessional statement given by the assessee at the time of....
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.... the said impounded material during the assessment proceedings in the A.Y. 2013-2014. Subsequently, the Asst. Commissioner of Income Tax, Circle-1, Kurnool has issued summons and asked for explanations and clarifications on each file / paper / material / documents etc impounded at the time of survey operations on 20.12.2016 during the scrutiny assessment proceedings for the assessment year 2014- 2015. The appellant's firm Managing Partner Sri. A. Jayaramudu has clearly explained of each paper / file / material / documents etc by item wise and filed a detailed explanation annexure on the impounded material. The Asst. Commissioner of Income Tax has recorded a sworn statement from the Managing Partner Sri. A. Jayaramudu and asked in Q.10 by showing sum impounded material and asked for the clarification. The Managing Partner of the firm has explained in detail on the impounded material shown from No. AJ 6 AJ 17, AJ 29, AJ 39 and AJ 16 and the Asst. Commissioner of Income Tax has satisfied with the explanation given by the appellant. Hence, the appellant submits that the noting made in Paper No. AJ 23 [Classmate Note Book - Blue planet] not related to the appellant firm and ....
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....income offered. But he has revised firms income. This clearly shows that he has retracted to his declaration given u/s 131 of the IT Act for additional income he has admitted. Hence the income of Rs. 2 Crores as admitted by the A. Jayaramudu his added back in the hands of the assessee firm. The appellant is referring the CBDT Circulars issued by the CBDT on the subject of survey proceedings and admission of income during survey proceedings. The appellant is referring several case laws in support of its submission that, the offering of income at the time of survey operations has no evidentiary value and the addition should be supported with sufficient evidences found in impounded material. The appellant submits that, it has filed the return of income on the basis of the books of accounts 1 records of the firm. The appellant firm has sold only One plot for Rs. 1,96,000/- and earned net profit of Rs. 9,3071- only in the F.Y. 20122013 relevant to the Asst. Year 2013-2014. There was no any evidence 1 no basis / no incriminating material found / no deficiencies in the books of accounts / records of the firm found, no deficiency found on the noting 1 material/records impounded at th....
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....er was passed against the CBDT Circular; j. The Assessment Order passed against the Supreme Court Judgment and other High Courts 5. The appellant has filed various case laws in support of its submissions. [The case laws are filed in paper book and placed on record]. I. CIT v. S. Khadar Khan Son (2013) 352 ITR 480 / [2012] 210 Taxman 248/ 79 DTR 184/254 CTR 228 (SC) By Asmeet Shah on 19.01.2015 II. Madras High Court The Commissioner Of Income Tax vs M/S.S.Khader Khan Son on 4 July, 2007 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 4.7.2007 THE HON'BLE MR.JUSTICE P.O.OINAKARAN AND THE HON'BLE MR.JUSTICE P.P.S.JANARTHANA RAJA T.C.(A).No.867 of 2007 The Commissioner of Income Tax Salem 1. .. Appellant Vs. M/s.S.Khader Khan Son, 90 Syed Madar Street Shevapet Salem ... Respondent III. HIGH COURT OF GUJARAT KAILASHBEN MANHARLAL CHOKSHI vs. COMMISSIONER OF INCOME TAX IV. IN THE HIGH COURT OF KARNATAKA Chief Commissioner Of Income-tax, Hubli. Vs. Pampapathi. V. IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH "A", PUNE Jyotichand Bhaichand Saraf & Sons Pvt. Ltd. Vs. DCIT ITA NO. 08/PN/2011 (Block Period: 1996-97 to 2002-2003) VI. Andhra High Co....
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....ed in an irrebuttable presumption against the assessee. The burden of showing that the assessee had disclosed income is on the revenue and that burden cannot be said have been discharged by merely referring to the statement. Therefore, such statement cannot be made the sole foundation for making the addition of income. We find support from the CBDT circular Dt. 10.03.2003 issued by the Central Board of Direct Taxes, which took exception to the initiation of the proceedings on the basis of the retracted statements. (ii) There is no any evidence or material found in the impounded records to support the addition of income of Rs. 2,00,00,000/-. Hence, the addition of income of Rs. 2,00,00,000/- is deleted. 8. In the result, the appeal is allowed". 3. Learned CIT-DR's sole argument as per Revenue's pleading is that the CIT(A) has erred in law and on facts in deleting the impugned "substantive" as well as the "protective" additions on conjunctures and surmises despite the fact that the assessees had duly admitted the foregoing income(s) during the course of survey dt.02-12-2013 based on the documentary evidence. And that although these assessees had retracted from the statement(s)....