TMI Blog2009 (8) TMI 675X X X X Extracts X X X X X X X X Extracts X X X X ..... with the return by the assessee as the entries in the books of accounts were supported by the primary evidence. The Commissioner (Appeals) also accepted the explanation that the statement were made by the assessee without understanding the import of the same as he was under stress due to suicidal death of his daughter. The Commissioner (Appeals) also considered the other aspect that the primary evidence produced by the assessee was also reflected in the sale tax return filed by the assessee, which were produced before the appellate authority. Held that - the findings of the fact recorded by the Commissioner (Appeals) and subsequently confirmed by the Tribunal in appeal were concurrent finding of fact and were not perverse. This orders were justified. - 19 of 2006 - - - Dated:- 21-8-2009 - DHIRENDRA MISHRA and R. N. CHANDRAKAR JJ. S. Rajeshwar Rao for the appellant. Moolchand Jain for the respondent. JUDGMENT The judgment of the court was delivered by 1. Dhirendra Mishra J.-The appellant-Revenue has preferred this appeal under section 260A of the Income-tax Act, 1961 (for short "the Act") against the order dated December 16, 2005 passed by the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 7,18,028 as his undisclosed income for the relevant accounting year and he may be given an opportunity to pay income-tax. Similarly, stock worth Rs. 37,06,697 was found in the premises during the survey and the assessee offered the value of excess stock of Rs. 24,49,707 for taxation after subtracting the value of closing stock as on March 31, 1997. However, the assessee did not offer any amount in the return either on account of excess cash or on account of value of excess stock found during the survey. 4. During the assessment proceedings, the assessee referred to his letter dated January 31, 2000 in which he has stated that he could not file return for the assessment years 1998-99 and 1999-2000 before the survey proceedings as he was disturbed on account of suicidal death of his daughter. Stock found during the survey has been taken by reducing the stock on March 31, 1997 without considering the purchases and sales made between April 1, 1997 and October 31, 1999. The correct position could only be found by taking into consideration the transactions in goods up to the survey date. Similarly, the full amount of cash was taken as undisclosed income ignoring that the assessee w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stoms Act matter it was held that admissions made by the assessee before the Income-tax Officer would bind the assessee. 6. With the aforesaid discussions, an addition of Rs. 6,33,753 towards cash found during survey ; Rs. 24,49,707 towards value of excess stock ; Rs.38,390 towards taxable new goods account ; and Rs. 45,510 towards tax paid new goods account were made and total income of the assessee was assessed at Rs. 33,19,910. Penalty proceedings under section 271A of the Act was directed to be initiated separately. It was further directed that interest under sections 234A, 234B and 234C of the Act was chargeable. 7. Appeal preferred by the assessee was allowed by the Commissioner of Income-tax (Appeals) on the ground that the statement of the assessee was not corroborated by the facts and circumstances and, therefore, it has no evidentiary value and the assessee can very well retract it. Addition of Rs.30,83,460 towards undisclosed income and stock made by the Assessing Officer was deleted. Similarly, addition of Rs. 38,390 was also deleted. However, charging of interest under sections 234A, 234B and 234C of the Act was upheld and appeal against initiation of penalty p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dmitted the assessee as the controlling person for financial affairs. In the statement recorded during the survey, the assessee confirmed that VDIS, sale proceeds were used for construction of house property. Initially, the assessee confirmed the cash found at the premises of his mother as his personal cash, however, subsequently, he claimed that the same belongs to his Hindu undivided family. Substantial sums aggregating to Rs. 11,77,766 was shown as sundry creditors for goods as on October 21, 1999, whereas the sundry creditors in the preceding two years was of Rs. 52,782 and Rs.1,06,066. Sales of Rs. 7,15,718 were shown for a major period of seven months and the balance sales of Rs. 18,63,832 for five months out of total sales of Rs. 25,79,550, which was highly improbable. The above facts clearly establish that the assessee has retracted his admissions after 3\xba months after fabricating the alleged primary records. Since the assessee failed to satisfactorily explain the excess cash and stock found during the survey, as required under sections 69A and 69 of the Act, it has to be deemed as the assessee's income applying the principles of law laid down in the matter of CIT v. Du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts were found in the books of account which entitles addition under section 68 of the Act or for that matter under section 69 or 69A of the Act. It was argued that the findings of fact recorded by the Commissioner of Income-tax (Appeals), which has been subsequently confirmed by the Tribunal, is based on detailed verified primary records and no question of law arises for adjudication of this appeal. It was also argued that, vide Instruction No. F. No. 286/2/2003-IT (Inv.), dated March 10, 2003, the Board has pointed the instances where the assessee has been forced to confess undisclosed income during the course of search, seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessee while filing returns of income, do not serve any useful purpose and therefore, there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed. No attempt should be made to obtain confession as to the undisclosed income. The officers have been seriously warned in this regard. 12. It was also argued that the statement recorded on o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee did not file various records, which he filed before the STO, which were subsequently filed at the appellate stage. Sections 68, 69 and 69A of the Act are not applicable in the facts of the present case and the same have been duly explained in the written submissions before the Commissioner of Income-tax (Appeals). 16. We have heard learned counsel for the parties. 17. We have already reproduced the findings recorded by the Assessing Officer, in detail, as also the findings recorded by the Commissioner of Income-tax (Appeals) whereby the order of assessment has been set aside and reliefs have been allowed to the respondent-assessee. 18. The Tribunal, after considering the rival submissions of the parties and material available on record, recorded the finding in paragraph 8 of the impugned order as under : "The retraction by the assessee appears to be bona fide in so far as in the state of mind when the survey had occurred the assessee may have overridden the fact of death of his daughter and the fact that the books of account were not maintained properly. The assessee in the proceedings under section 143(3) produced the books of account which were on the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of stock from March 31, 1997 to the date of survey. Similarly, with the cash balance the expenses and other claim on account of payments to creditors were not disturbed which were inscribed in the books of account on the basis of primary vouchers and, therefore, were accepted by the Assessing Officer. It was simply rejection by the Assessing Officer without any basis. On the issue of obtaining the gifts and other creditors it was explained in detail and were verified and, therefore, no addition was made on account of holding the donors as non-genuine. The Assessing Officer had relied on the apex court decision in the case of Surjeet Singh Chhabra v. Union of India, AIR 1997 SC 2560 which was considered by the learned Commissioner of Income-tax (Appeals) as not applicable to the facts of the case before him. There was no contravention by the assessee under the provisions of the Customs Act and FERA which was considered by the apex Court. On the decision relied upon by the Assessing Officer of the Kerala High Court in the case of V.Kunhambu and Sons v. CIT reported in [1996] 219 ITR 235 which has also been relied upon by the learned Departmental representative the learned Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer on the ground that the donors were close relatives of the assessee, the donation was made in cash just to enable the assessee for the purpose of his accounting to show that he made purchases from the money received by him by way of donation. 20. The Commissioner of Income-tax (Appeals) on appreciation of material available on record accepted the explanation offered by the assessee and also accepted the books of account filed along with the return by the asses-see as the entries in the books of account were supported by the primary evidence. The Commissioner of Income-tax (Appeals) also accepted the explanation that the statements were made by the assessee without under-standing the import of the same as he was under stress due to suicidal death of his daughter. The Commissioner of Income-tax (Appeals) also considered the other aspect that the primary evidence produced by the assessee also reflects in the sales tax return filed by the assessee, which were produced before the appellate authority, and the same was subsequently confirmed by the Tribunal. From Instruction No. 286/2/2003, dated March 10, 2003 it is evident that the Board had issued instructions to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubsequently confirmed by the Tribunal, we are of the opinion that the findings recorded by both the forums below cannot be termed perverse and beyond record. The Commissioner of Income-tax (Appeals), after considering the material produced by the assessee during the assessment proceedings and on due appreciation thereof, has accepted the explanation of the assessee for retracting his admission as bona fide and further accepted the books of account prepared by the asses-see on the basis of duly verified primary evidence. The Tribunal has confirmed the order of the Commissioner of Income-tax (Appeals) in paragraph 8 of the order which we have already produced. The substantial questions of law on which the appeal has been admitted are basically the questions of fact. It is settled law that the confession made by the assessee during the survey proceedings is not conclusive and it is open to the assessee to establish by filing cogent evidence that the same was not true and correct. On the basis of aforesaid discussions, we are of the opinion that the findings of fact recorded by the Commissioner of Income-tax (Appeals) and subsequently confirmed by the Tribunal in appeal are concurren ..... X X X X Extracts X X X X X X X X Extracts X X X X
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