TMI Blog2008 (2) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... nder s. 133A of the IT Act was carried out in his business premises on 21st March, 2003, during the course of which, excess unaccounted stock of gold jewellery and silver articles were found out. The survey proceeding was converted into search proceeding by issue of warrant of search under s. 132 of the Act on the very same day by 11.30 a.m. The search proceedings were finally concluded on 25th April, 2003. Two sworn statements were taken on that date from the assessee viz., one during the course of survey and another one during the course of search. One more statement was also recorded from the assessee on 26th March, 2003 during the continuance of search proceedings. In all these three statements, the assessee admitted the excess stock of gold jewellery and silver articles as his undisclosed income and agreed to pay tax. The value of undisclosed stock was arrived at that time at Rs. 47,97,837 by adopting some rate of GP. The assessee also paid the tax amounting to Rs. 28.80 lacs, which was calculated at the rate of 60 per cent of the undisclosed income. 4. In response to the notice under s. 158BC issued by the AO on 11th July, 2003, the assessee filed his block return on 18th S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t any prior information about the misconduct or concealment on the part of the assessee. He further submitted that s. 133A(3)(iii) of the Act permits the IT authority to record statement of any person. He further continued to say that the said section specifically authorises the IT authority to use the information so obtained in any proceeding under the Act. He adverted our attention to Expln. (b) of the said section wherein the term "proceedings" has been defined. according to which the proceedings include all past, present and future proceedings. He further adverted our attention to s. 131(1A) of the Act which, for the purposes of making any enquiry or investigation for certain purposes, vests an IT authority referred to therein with the powers of a Court under the C.P.C., 1908 when trying a suit in respect of following matters, namely: (a) discovery and inspection. (b) enforcing attendance of any person... (cl compelling production of books of account. (d) issuing commissions. Accordingly the learned Departmental Representative submitted that the power of survey under s. 133A represents only such kind of power of investigation to elicit various types of information abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s statement once again proves the case of the assessee that the excess stock has been found out during the course of survey only. Hence having disclosed excess stock during the course of survey operation, the said income would not fall under the ambit of "undisclosed income". Hence the learned Authorised Representative pleaded that the order of the learned CIT(A) be upheld. 10, We heard the rival contentions. Before proceeding in this matter, we feel it is better to analyse the decision of Hon'ble Madras Tribunal decision in the case of Sivabala Devi, as both the assessee and learned CIT(A) have placed their reliance on it. In that case, the appellant had furnished certain information regarding her investments, sources thereof and the nature of her income to the IT Department as early as on 15th May, 1995, through her reply to the ADI, Investigation-II, Madurai, in compliance with his notice under s. 131 of the IT Act. The search was conducted in the residence of the appellant's co-brother on 20th Jan., 1996, i.e. nearly after a gap of eight months. So there was actually no connection between the disclosure made by the assessee and the search operations. Both were independent of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d any statement obtained during such examination may thereafter be used in evidence in any proceeding under the Act. 13. Whereas for exercising power of survey under s. 133A of the Act, no such prior information or reason is necessary and it also overrides other provisions of the Act with non obstante clause. In the survey operation, the IT authority can enter only the business premises and also only during the hours at which such place is open for the conduct of business or profession. Under the power of survey under s. 133A, an IT authority can inspect the books of account, make an inventory of cash, stock or other valuable article or thing checked or verified by him, record a statement of any person (without administering oath) which may be useful for, or relevant to, any proceeding under the Act. The information so collected may be used in any proceeding, which may be past, present or future proceeding. 14. The Act has prescribed a special procedure for assessment of search cases (i.e. cases where search is initiated under s. 132) for the search initiated after 30th, June, 1995, and on or before 31st May, 2003, in which "undisclosed income" has been found out. No such kind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isclosed by an assessee in an effort to escape assessment. 'Not disclosed' implies the intention of the assessee to hide the existence of the income or the asset from the rr Department while being aware that the same is rightly taxable.' The Madras Bench of Hon'ble Tribunal in the case of Sivabala Devi has described the word "disclosed" as under: "'Disclosed' " for the purposes of this Act definitely means, disclosed for the purposes required by the various provisions contained in the IT Act, 1961. Disclosed for the purposes of the IT Act, 1961, does not mean, disclosed for the purposes of making an assessment alone. There is no such a restriction given in the definition of 'undisclosed income' so as to presume that particulars furnished by an assessee through filing a return of income alone constitute disclosing the particulars for the purposes of this Act. The assessee might be furnishing details and particulars regarding his property and income in compliance of the requirements made by appropriate authorities invoking different provisions of the IT Act, 1961." 17. A combined reading of above cited decisions makes it clear that the disclosure should be in compliance with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al commencement and completion of survey proceeding under s. 133A and during the continuance of survey proceedings, the search proceedings under s. 132 having been initiated on the basis of information obtained, in the facts and circumstances of the case, it can only be said that the survey proceeding loses its identity and in fact, gets merged with the search proceedings. Hence as claimed by the assessee, there cannot be two independent proceedings in the present case and the conclusion of operation results in search proceeding only. Had the survey and search proceedings been carried out on two different dates independently, then the claim of the assessee may hold good. (b) As the survey operation is only an investigation proceeding and the information obtained during the course can be used for any future proceeding, the search can only be said to be rightly initiated in the present case on the basis of information about the excess unaccounted stock obtained during the course of survey and the end result of operation is search only. (c) The value of excess stock cannot be said to have been disclosed to the Department for the following reasons: (i) The "evidentiary" value is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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