TaxTMI 
TaxTMI 
2011 (2) TMI 1606
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....lls and the vouchers were entered only upto 29.1.2005. The cash balance was found at ₹ 14,500/-. The A.O. recorded the statement of Shri Shakir Husain Qureshi (in short Shri SHQ) who is a partner of the assessee- firm. In the statement given to the A.O., during the course of the survey, the A.O. confronted Shri SHQ by putting question in respect of some of the purchases. According to the A.O., they were not coordinated with the bills. Shri SHQ offered ₹ 1,90,00,000/- as an additional income for the A.Y. 2005-06. He also agreed to pay the tax on the said amount and gave two cheques of an amount of ₹ 25 lakhs dated 7.2.2005 and ₹ 45 lakhs payable on or before 12.3.2005. 4. Subsequently, the assessee filed the return of income for the A.Y. 2005-06 on 22.10.2005 declaring total income at ₹ 3,22,95,985/-. The return filed by the assessee was selected for scrutiny. It was noticed by the A.O. that as per the profit and loss account, the assessee has not disclosed the income offered at the time of the survey. The A.O. has given the summary of the profit and loss account at page no.2 of the assessment order. The assessee has declared the net profit (before pay....
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.... of S.C. Gupta, the Allahabad High Court has clearly held that addition made on the basis of statement given at the time of the survey action is liable to the upheld unless, the assessee establish that the admission made was wrong and in fact there was no additional income. 10. In the light of above observation, if we compare the case of assessee under consideration, the following facts are emerging: i) Survey was been done on 2nd February, 2005 and the assessee was unable to reconcile the discrepancies pointed out at the time of survey. ii) After seeing discrepancy, the assessee has declared ₹ 1.91 Cr. as an additional income for the F.Y. 2004-05. iii) At the time of the survey itself, the assessee has given a cheque of ₹ 70 lakhs for the payment of the taxes on additional income. iv) In the survey itself, the assessee has given a commitment that the declaration made will not be retracted. v) The assessee has never retracted the statement till date. vi) On 12th November, 2007, the assessee has submitted a letter that "there was no question of any additional income as per the book of account." First time, the assessee has denied his liability of ....
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....parties. The assessee further contended that there was no legal base for making the addition merely on the basis of the statement recorded during the course of the survey proceedings. 7. The assessee also contended that the payments are made through banking channels, which record is available in the books maintained on the computer. It was also contended that the entire details of the payment along with the details of the purchase bills were submitted to the A.O. in the post survey proceedings and no query was raised thereafter. The assessee also contended that at the time of the survey, certain bills were not found. It was stated that in the course of his business, the assessee gets hundreds of bills and in the process it is quite possible that the staff while filing the said bills in respective purchase bill files might have misfiled the same and hence in confusion the said statement was given. It was contended that there was alleged discrepancy in the record maintained by the assessee. The Ld. CIT (A) accepted the plea of the assessee on that except no addition can be made merely on the basis of the statement recorded during the course of the survey action and Ld. CIT (A) delet....
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....tract the statement and the admission so made. In the present case when the appellant has produced all the supporting documents later in respect of purchases which were alleged to be bogus on the date of survey the case of mistaken belief of facts is also made out. There appears no reason for any normal adult male person to make such disclosure if his transactions are genuine as is the circumstances in the present case. This aspect also casts serious doubts about the recording of statement in an open and fair manner without any coercion and pressure. The very fact the commitment to obtain two cheques has also been obtained betrays a lack of trust or confidence of the surveying authority. If a person makes a voluntary confession based on solid evidence and facts then he will voluntarily follow it up with payment of taxes and there will be no need for making him commit to pay taxes by the Income Tax Authority. Both in the post survey proceedings and scrutiny assessment proceedings detailed explanations were submitted by the appellant which was supported by proper evidences and documents to establish why the statement made at the time of survey is not being adhered to or retracted. T....
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.... unable to reconcile the discrepancy as such he is offering ₹ 1.91 Crores as additional income on that account. However in the immediate post survey proceedings it was able to produce all the related documents before the assessing authority. AT the assessment stage too it was demonstrated that the said transactions are genuine. The AO has not been able to corroborate the declaration, with any document, evidence or asset. As such on the facts and circumstances as well as established position of law as highlighted aforesaid the addition of ₹ 1.91 Crores made on uncorroborated statement, which was later retracted, is deleted." 8. We have heard the rival submissions of the parties and also perused the record. As per the admitted fact, no incriminating material was found in the course of the survey action. The A.O.'s main thrust is on the statement given by Shri SHQ a partner of the assessee-firm. During the course of survey action u/s.133A of the Act on 1.2.2005. It is also admitted fact that the noting of the bills and vouchers were made up to 29.1.2005 and only the cash book was not updated. On the perusal of the statement recorded u/s.131, which is reproduced b....
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.... much force in the argument of the learned counsel for the appellant that the statement, elicited during the survey operation has no evidentiary value and the ITO was well aware of this." 10. The identical view has been taken by the co-ordinate Benches in the case of Ashok Manilal Thakkar 279 (AT) ITR 143 (Ahm.) and in the case of DCIT vs. Premsons 130 TTJ 159 (Mum). 11. In the case of Premsons (supra), the ITAT Mumbai held as under:- "7. The real question before us is about the deletion of addition of ₹ 28.85 lakhs which was made by the AO on the ground that the assessee had not offered such amount in the return of income even though it was admitted at the time of survey from the facts recorded above it is clear that the partner of the assessee-firm accepted additional income of ₹ 50 lakhs with ₹ 21 lakhs towards excess stock and ₹ 29 lakhs towards "any other discrepancy". To the extent of the excess stock found at the time of survey, the amount was promptly offered for taxation but the assessee retracted from his statement vide its letter dt. 24th March, 2003, a copy of which is placed at p. 89 of the paper book. It has been mention....