TaxTMI 
TaxTMI 
2026 (6) TMI 1454
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....IT (A)'] dated 13.06.2019 for the Assessment Year (A.Y): 2013-14: Proposed questions of law in Tax Appeal No. 466 of 2025: "A. Whether or the facts and circumstances of the case and in law, the ITAT erred in deleting the addition of Rs. 3,52,00,000/- made by AO on account of unexplained investment evident from the entries found in the diary impounded during survey proceedings, which was duly confirmed by CIT(A)? B. Whether on the facts and circumstances of the case and in law, the ITAT erred in not appreciating that assessee has not furnished any supporting evidences to justify his retraction of statement which was recorded on oath during survey proceedings?" Proposed questions of law in Tax Appeal No. 468 of 2025" "A. Whether on the facts and circumstances of the case and in law, the ITAT erred in confirming the decision of CIT(A) who has deleted the addition of Rs. 19,40,00,000/- made by AO on account of unexplained investment which is evident from the entries found in the diary impounded during survey proceedings and also disclosed by the assessee in its statement recorded on oath during survey proceedings ? B. Whether on the....
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....f probability and some of the evidences indicate that so called cash transactions have been written hurriedly in early morning and are far from truth. The Affidavit of the said Accountant Shri Shailendra Y. Doshi on 10.04.2013, which was also placed before the Assessing Officer, who made an addition of Rs. 19.40 crores only on the basis of the entries recorded in the diary seized from the premises of the assessee during the course of survey. 3.5 The Assessing Officer vide Assessment Order dated 30.03.2016, while referring to the contents of the diary for the Investments made in various plots of land at village Harsol, Taluka-Talod, worked out the total of such entries of investments to Rs. 9,47,78,991/- and on the basis of the answer to Question No. 29 given by the appellant in the statement recorded during the course of survey proceedings wherein it is contended that the amount of Rs. 5,30,78,991/ were credit entries and remaining amount of Rs. 4,17,00,000/- were debit entries, which were on account of the amounts received from the partners of the firms and others. However, the Assessing Officer rejected the detailed submissions made by the assessee in the letter dated 21.03.20....
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....Normally in property transactions the Sale deed describes the details of property, how long the same had been owned by Vendor, is it by way of Sale or inheritance, mode of payments/consideration received, etc. It is a case on record the property relates to Vejalpur land was purchased by AVS Developers Pvt. Ltd. in July to Nov 2008 for the cost of Rs.421 lakhs and a registered Sale Deed executed on 10-11-2008 with original land owner Shri Jugaji Thakor. 6.2. It is thereafter AVS Developers Pvt. Ltd. had transferred the to AVS Infra Pvt. Ltd. for a consideration of Rs 453.21 as indicated in the above seized deed, the difference amount have been duly accounted for by the said company in A.Y. 2009-10. Further the said purchase and sale are duly recorded in the Audited Accounts of the Company i.e. AVS Developers in A.Y. 2009-10 which are placed at page 225 of PB). Whereas the Ld AO without considering the above documents held that the land transaction completed on execution of registered sale deed in Nov, 2008 but the so called cash payments were made in Sept to Dec' 2012 to the Vendor Jugaji Thakor and others as per the newly written diary. 6.3. From the ....
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....ber to December 2012 is based on the Civil Suit Decree dated 19-11-2012 in respect of the family dispute of Jugaj Thakor's family. This finding arrived by the Ld AO is totally baseless and illogical, since the registered Sale Deed was executed early as 10-11-2008 and the so called cash payments cannot be made after passage of four years in respect of the concluded transaction. The assessee was not at all concerned with the internal family disputes of Shri Juqaji Thakor and it defies all logic, reasons and also human probability that the original owner who executed the registered Sale Deed will wait for cash payments till four years. Further now, the High Court order also held that the claim of the other family members of land ownership was without basis dismissed their claim. 6.7. In view of the above direct evidences and retraction affidavit on oath, it is clear that the Pocket diary Nilkanth A-1, was prepared hurriedly and under duress by the Survey Team, so the same can't be the ground for any addition and the said addition is rightly deleted by CIT(A). Thus the findings arrived by the Ld CIT [A] does not require any interference and the Grounds of appeal raised....
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....by the assessee before the Assessing Officer after more than 4 months of survey proceedings as it is nothing but an afterthought. It was also submitted that though Tribunal has referred that a decree was passed by the Civil Court on 19.11.2012 in respect of the family dispute of the owner of the land of Jugaji Thakore's family, the finding which was considered by the Assessing Officer, the Tribunal discarded the same only on the ground that the sale-deed was executed on 10.11.2008 and so called cash payment cannot be made after passage of 4 years. It was submitted that the cash payment relates to such sale of aforesaid land was admitted by the assessee before the survey party. It was, therefore, submitted that the order of the Tribunal suffers from perversity and the appeal filed by the revenue shall be admitted on the proposed questions of law. 7. Having heard the learned advocate for the appellant and having considered the findings of facts arrived at by the CIT(A) and the Tribunal, it appears that the Tribunal after considering the facts of the case, has held that the diary which was the sole basis for making addition by the Assessing Officer, has been discarded by the CIT(A)....
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....ng the relevant documents. 6.4 Further, when the land was purchased by M/s AVS Infracon Pvt. Ltd. which had 11 directors including the appellant who was admitted as Director w.e.f. 01.08.2008 in the said company which purchased the land vide registered sale deed dated 10.11.2008 and in continuation of the banakhat made on 21.07.2008 (prior to joining by the appellant as Director) and without conducting proper inquiry in the case of this company and another company viz. M/s AVS Developers Pvt. Ltd. in which the appellant was not at all a director which initially entered into the banakhat with Shri Jugaji Babaji Thakor, the original land owner. 6.5 While arriving at the above conclusion, I have derived the judicial support from the cases relied upon by the appellant and also the cases relied on by me which are as under:- 1) Paul Matthews 263 ITR 101 (Kerala) - Relied on by the appellant 2) S. Kahder Khan 300 ITR 157 (Madras) - Relied on by the appellant 3) S. Khader Khan 352 ITR 480 (SC) - Relied on by the appellant 4) DCIT Vs. Bansal Credits Ltd. decided by the Hon'ble ITAT, Delhi (2016) 74 Taxmann.com 224 (Delhi ITAT) ....
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....of survey. With this, whether the addition can be based solely on the surrender made during the course of survey. High Court has considered this issue in the case of CIT v. Dhingra Metal Works [2010] 328 ITR 324/[2011] 196 Taxman 488 (Delhi). [Para 7] • The ratio of the above decision would be squarely applicable to the facts under appeal because in the case under appeal before us also, the statement was recorded under section 133A and not under section 132(4) and moreover, the assessee has furnished voluminous evidences to discharge the onus of proving the cash credit under section 68. The Assessing Officer has not specified a single credit which is to be treated as unexplained. [Para 8] • The addition should be based upon the evidences/material gathered during the course of search/survey rather on the basis of statement recorded during the course of survey. Admittedly, in this case, no material was collected during the course of survey which could establish that the credit was non-genuine. The Commissioner (Appeals) has recorded the finding that the assessee has taken the small credits of below Rs. 20,000 from various persons. However, as per KYC documen....
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....on of High Court in the case of Dhingra Metal Works (supva) and of Apex Court in the case of CIT v. S. Khader Khan Son [2008] 300 ITR 157 (Mad.) as well the Circular of CBDT vide letter F, No. 286/2/2003-IT(Inv.II) dated 10-3-2003, the addition cannot be made only on the basis of surrender made at the time of survey. In view of the above legal and factual position, there is no infirmity in the order of the Commissioner (Appeals). Accordingly, the same is upheld and revenue's appeal is dismissed. [Para 11] 5) D.S. Agencies & Associates v. Additional Commissioner of Income-tax [2017] 82 taxmann.com 252 (Mumbai - Trib.) Head Notes Section 133A of the Income-tax Act, 1961-Power of survey-Assessment year 2006-07-Addition made purely on basis of statement made during course of survey under section 1334 which was later on retracted by assessee was to be deleted [In favour of assessee) A survey under section 133A was conducted on branch office of the assessee-firm. During the survey, the partners of the assessee admitted that commission charges paid to Litaka were bogus and not genuine and no services were even rendered by the Litaka and the payments....
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....ure for Rs. 6 lakh. The Assessing Officer, while completing the assessment, treated the said investment of Rs. 6 lakh as unexplained investment in the year under consideration being the year of survey. That apart, the assessee's explanation that after maturity of fixed deposit receipts, the said amount of investment in fixed deposits was claimed to have been invested by the assessee in the following assets, i.e., (i) investment in the residential building/furniture Rs. 6,00,000, (ii) gift to Hiren Dattani Rs. 1,00,000, (iii) Investment in gold bullion Rs. 27.34.500, (iv) investment in stock held by the partnership firm, M/s. M. P. Scrap Traders Rs. 25,50,320, (v) excess cash found in the business premises Rs. 7,00,500, and (vi) the balance amount stood utilised towards the payment of taxes for the aforesaid years, in which, it was surrendered. The Assessing Officer merely accepted the application of money towards gift to Hiren Dattani for Rs. 1 lakh gold bullion Rs. 27,34,500 and the payment of taxes. He, however, did not accept the investment in excess stock for Rs. 25,50,320 and the excess cash found Rs. 7,00,500 ....
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.... time of search on January 4, 2007, which subsequently came to be retracted and/or explained within the period of 19 days, i.e., January 23, 2007. It is required to be noted that as such except the aforesaid statement recorded at the time of search which was subsequently retracted, there was no other material and/or corroborative material with the Assessing Officer, on which, the addition of Rs. 6 lakh in the hands of Shri Kishorebhai Mohanlal Karia and Rs. 7,00,500 cash in hand and Rs. 25,50,320 as unexplained investment in stock in the hands of the assessee, M/s. M.P. Scrap Traders can be justified. In the backdrop of the above, the reasoning given by the learned Tribunal in paragraph 5 made, while deleting the aforesaid additions, are required to be considered. In paragraph 5, the learned Tribunal has observed and held as under: '5. We have heard the parties with reference to the material on record. Shri Kishorebhai Mohanlal Karia, partner of M/s. M.P. Scrap Traders has admitted of unexplained investment in fixed deposits and deposits in bank accounts and surrendered the same as his income for returns of income filed for the assessment years 2000-01 to 2004-05. The tota....
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....he survey party. Merely in his statement, the excess stock found in the hands of the partnership firm stated in the said statement was taken as surrender thereof separately over and above the excess cash found. The assessee in his reply to the show-cause notices placed heavy reliance on the affidavit dated, January 23, 2007, in which the aforesaid investments were claimed to have been made out of realisation of the fixed deposits and other bank deposits for which surrender of income was made in the earlier years. The Revenue authorities did not find any other application of such amount of surrendered income. They have rested their decision only on the retraction of statement made subsequently which was for a limited purpose only. After the assessee had filed the affidavit, he was neither cross-examined on that point nor was he called upon to produce any documentary evidence. Consequently, the assessee was entitled to assume that the income-tax authorities were satisfied with the affidavit as sufficient proof on this point. In fact, the Assessing Officer has not even rejected such an affidavit of the assessee in the entire proceedings before him. Under the circumstances and having r....
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....avour of assessee] FACTS  A survey was conducted in the premises of the assessee where certain discrepancies were noticed. On the basis of these alleged discrepancies Rs. 75 lakh was said to have been surrendered. The assessee retracted from the surrender by writing a letter to the Additional Commissioner.  During the course of assessment, the assessee submitted that the surrender was obtained under intimidation and coercion and was also based on forged documents and same was illegal. Therefore, the same could not be included.  The Assessing Officer however, held that the assessee's statement being in the nature of an admission and therefore, the same was valid. He ultimately added Rs. 69 lakh on account of receivables and Rs. 5 lakh on account of surrender letter against cash. On appeal, the Commissioner (Appeals) observed that the admission was proper evidence and a proper statement had been recorded which could not be proved by the assessee to be wrong and, therefore, the assessment was justified.  On second appeal before the Tribunal, the assessee submitted that nothing incriminating was found duri....
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....x court has held that admission is extremely important piece of evidence but it cannot be said that it is conclusive and is still open to the person who made admission to show that it is incorrect. [Para 14] • The Court concluded as follows: (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 court in Pullangode Rubber Produce Co. Ltd. (supra); (ii) In contradistinction to the power under section 133A, section 132(4) enables the authorised 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 any evidentiary value obviously for the reason that the Officer is not authorised to administer oath and to take any sworn statement which alone has evidentiary value as contemplated ....
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....en the assessee retracted from the surrender then the statements of these persons should have been recorded which has not been done. [Para 21] • There is a clear cut overwriting in the inventory of notes of Rs. 500. Further, there is no mention about any note found in the denomination of Rs. 50. These features create doubt regarding the genuineness of the survey. The details of the return filed in the earlier years have been also perused. [Para 22] • Above clearly show that in the last four years two assessments have been taken up in scrutiny but hardly any substantial addition have been made. In fact perusal of the assessment orders would show that additions have been made mainly on account of disallowance of certain expenses which is a routine feature. [Para 23] • Therefore, addition has been made without any evidence and is merely on the basis of statement recorded during the survey which cannot be sustained. Accordingly the order of the Commissioner (Appeals) is set aside and the addition is deleted. [Para 24] 8) Income Tax Officer, Ward-4, Thiruvalla v. Toms Enterprises [2019] 103 taxmann.com 289 (Cochin - Trib.) FACTS ....
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.... empowered to examine on oath. Section 131 confers power to the income tax authority to record the statement in the course of proceedings before them. The power invested under section 131(1) is only to make enquiries and investigation and not basically meant to voluntary disclosure or surrender of concealed income. As per section 31 of the Indian Evidence Act, 1878, admissions are not conclusively proved as against admitted proof. In the absence of rebuttable conclusion, admission bind the maker when these are not rebuttable or retracted. The burden to prove 'admission' as incorrect is on the maker and in case of failure of the maker to prove that the earlier stated facts were wrong, these earlier statements are suffice to conclude the matter. If retraction is proved sufficiently, the earlier stated facts loose their effect and relevance as a binding evidence and the authorities cannot conclude the matter on the basis of the earlier statements alone. However, bald retraction of earlier admissions will not be enough even after retraction. Such statements cannot automatically become nullified. If the assessee proves that the statement recorded under section 131 was involuntar....
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....tremely an 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. Secondly, in contradistinction to the power under section 133A, section 132(4) enables the authorised 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 it is not given any evidentiary value obviously for the reason that the Officer is not authorised to administer oath and to take any sworn statement which alone has evidentiary value as contemplated under law. • Thirdly, The word 'may used in section 133A(3)( ), viz., record the statement of any person which may be useful for, or relevant to, any proceeding under this Act, 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. And finally, the....