TMI Blog2004 (8) TMI 631X X X X Extracts X X X X X X X X Extracts X X X X ..... ai. 3. A search and seizure action under section 132 of the Act took place on 5-3-2001 on the business premises of the assessee. At the time of search on 5-3-2001, cash of Rs. 2,650 was found, besides a loose paper file containing pages 1 to 100 which was seized. On verification of the loose paper filed containing pages 1 to 100 marked as Annexure A1 seized on 5-3-2001, it was noticed that most of the loose papers in the file related to monthly stock statement given to the bank. It was stated by the assessee s representative by letter dated 9-3-2003 addressed to the Assessing Officer that the statements given to the bank are of ad hoc nature, without any reference to the books of account, and comparative stock as per books cannot be ascertained on account of non-maintenance of stock register. It was also stated that stock inventory was being taken only at the end of the year, determining the value of the stock and not quantitative tally. Further cash memos/loose paper files marked as Annexures A/1 to A/4 were seized as per panchnama dated 16-3-2001, the contents of which, as noted in the assessment order as under : "Annexure A-1 : This is a loose paper file which contain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... screpancy, if any. Assessing Officer noted that the assessee had admitted further that even the profit on the suppressed cash sales are also covered in the above returned disclosure of Rs. 35 lakhs. 6. The Assessing Officer noted that the alleged letter of retraction dated 16-3-2001 did not bear any stamp or signature in token of receipt by the office of the DDIT (Inv.); and that no communication was received in respect of the retraction from the DDIT (Inv.), though while forwarding the seized material, the DDIT (Inv.) has also forwarded a copy of the affidavit made on 15-3-2001 by Shri Khatri, confirming that he has offered an estimated undisclosed income upto Rs. 1 crore for the group as a whole. The Assessing Officer concluded that the assessee was trying to play hide and seek, by filing on the one hand an affidavit dated 15-3-2001 and on the other hand, claiming to have filed the retraction letter on 16-3-2001. He, therefore, held that the copy of the alleged letter of retraction dated 16-3-2001 submitted by the assessee s representative was not admissible and bears no evidentiary value. 7. On the merits of the matter, he was of the view that the disclosure of Rs. 35 la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant legal position, as to the validity of statements recorded at the time of search, and consequences of subsequent retractions from the said statements, under the Income-tax Act, and following the ratio of the decisions of Hyderabad Bench decision of the Tribunal in Prasanchand Surana v. Asstt. CIT [2001] 76 ITD 423 ; of the Mumbai Bench of the Tribunal in Video Master v. Joint CIT [2002] 83 ITD 102; of the Pune Bench in Hotel Kiran v. Asstt. CIT [2002] 82 ITD 453 , the CIT(A) concluded that disclosure made by Shri Khatri in the instant case is not only made voluntarily and not on account of any threat, coercion and undue influence as stated at the end of his statement, but was also based on documents and material found during the search. He observed that the disclosure was made by him, after detailed examination and elucidation of the facts relevant to the disclosure. He noted that the disclosure is supported by affidavit filed on 15-3-2001, and the claim in the letter dated 26-3-2003 filed during the assessment proceedings to the effect that a retraction letter dated 16-3-2001 was filed with DDIT (Inv.) HQ-II was unsubstantiated. He also concluded that the conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the assessee has filed block return admitting undisclosed income of Rs. 35 lakhs to cover up various discrepancies in books of account. As the undisclosed income declared in the return is reasonable, he submitted that no further addition is called for. The learned counsel for the assessee, has filed a detailed paper-book running into 231 pages, containing inter alia preliminary; statements recorded under section 132(4) at the time of search on 5-3-2001; letter dated 16-10-2002, addressed to the Dy. CIT regarding credit of cash seized along with enclosures; details of turnover and sales and purchase payments; ledger accounts of sales, purchases, bank account, cash in hand, sundry creditors; statement of income and drawings; details of stock and cash; audit reports under section 44AB for assessment years 1998-99 to 2000-01; acknowledgement pages of returns of income of Shri T.J. Khatri for the assessment years 1991-92 to 2001-02 along with computation of income and challans for taxes paid for the assessment years 1998-99 to 2000-01. In a further paper book filed on 30-6-2004, copies of statements of Shri Mohamed Junus Khatri and Shri Deepak Babulal Shah, recorded on 5-3-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee in that behalf. The learned Departmental Representative, has also filed a detailed paper-book running into 59 pages, containing inter alia statements recorded under section 132(4) at the time of search, alleged letter of retraction submitted by the assessee, copy of sales ledger for March, 2-1, and has taken us through various portions in the statements recorded under section 132(4) at the time of search. She submitted that the case law relied upon by the learned counsel for the assessee is clearly distinguishable and submitted that the decisions relied upon by the CIT(A) in the impugned order and also the decisions of the Tribunal in Ramesh T. Salve v. Asstt. CIT [2000] 75 ITD 75 (Mum.); Hotel Kiran v. Asstt. CIT [2002] 82 ITD 453 (Pune); and Wall-Street Construction Ltd. v. Dy. CIT [2003] 87 ITD 43 (Mum.) (TM), copies of which are filed in her paper book, clearly apply to the facts of the case on hand. In the circumstances, the learned Departmental Representative submitted that the addition made by the Assessing Officer is quite justified and reasonable, and the same should be upheld. 11. We have considered the rival submissions and perused the elaborate orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dated 16-3-2001 to the DDIT and even filed an affidavit in support thereof, it may be true that copy of the letter filed did not bear the date stamp or acknowledgement of the office of DDIT in token of having received it, but the Assessing Officer, in all fairness, could have verified the receipt or otherwise of the same by the office of the DDIT, instead of rejecting it outright and proceeding on the basis of presumptions. He did not even attempt to find out the receipt or otherwise of such retraction letter and affidavit in the office of the DDIT. 12. Considering huge discrepancies found at the time of search, and detailed analysis of the material seized made by the Assessing Officer in the impugned order of assessment, in our considered opinion, the Assessing Officer should have arrived at the undisclosed income of the assessee for the block, independent of the disclosure made in the statement of Shri T.J. Khatri either at the time of search or thereafter till 15-3-2001, as the same is claimed to have been retracted by the letter dated 16-3-2001. It is no doubt true that there is no evidence of the receipt of letter of retraction of the assessee dated 16-3-2001 by the offi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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