TMI Blog2012 (12) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... o the assessee. Order set aside - Decided in favor of assessee Income from undisclosed sources – addition u/s 69 based on statement recorded during survey – Held that:- It is apparent that the revenue has not come out with any corroborative evidence to support the statement obtained from the assessee’s son in order to establish undisclosed income of the assessee. Board Circular F. NO.286/2/2003 dated 10-03-2003 is binding on the revenue. Addition made on mere statement on oath obtained at the time of survey cannot be relied upon to make addition without bringing forth any other materials on record to support the stand of the revenue. Addition is directed to be deleted - Decided in favor of assessee - ITA No.3610 & 3611/Ahd/2007 and 4086/Ahd/2008 - - - Dated:- 20-7-2012 - SHRI A. MOHAN ALANKAMONY AND SHRI KUL BHARAT, JJ. Appellant by Shri Rajesh Upadhyay, AR Respondent by Shri D. V. Singh, DR ORDER PER A. MOHAN ALANKAMONY: These three appeals in ITA No.3610/Ahd/2007, 3611/Ahd/2007 and 4086/Ahd/2008 are filed by the assessee aggrieved by the three separate orders of the learned CIT(A) in Appeal No.CIT(A) VLS/467/06-07, IT(A) VLS/466/06-07 dated 12- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut bringing on record that they are the transactions made during the year. Lr. CIT(Appls.), Valsad has also erred in sustaining the order of the A. O. 3. The learned A. O. has erred in law and on facts to add Rs.22,70,592/- in the year under appeal as the said sum is already taxed in A. Y. 1999-2000 on substantial basis which may not permit to add second time in this year. Lr. CIT(Appls.), Valsad has also erred in sustaining the order of the A.O. 4. Learned A. O. has erred in law and on facts to add an amount of Rs.10,00,000/- being expenses made by the appellant in Ganesh Hall, without discharging onus u/s 69 C of the Act. Lr. CIT(Appls.), Valsad has also erred in sustaining the addition made by the A. O. 5. Learned A. O. has erred in law and on facts to add Rs.3,29,408/- in the total income of the appellant, without giving breakup or bifurcation of such addition. Lr. CIT (Appls.), Valsad has also erred in sustaining the addition made by the A.O. Ground No.1 of AY 1999-2000 and 2000-01 3. The assessee is an individual, in response to notice u/s 148 of the IT Act for the AY 1999-2000 and 2000-01 requested the learned AO to treat the return filed on 21-05-2000 and 12-10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2006 and the necessary permission was also obtained from Additional CIT, Valsad on 3-2-2006. The statement of Dhansukhbhai Rangindas Geragwala was also recorded on 3-2-2006. However, no statement of Jagdishbhai Poonamji Sandesha was recorded though learned AO has stated so in his reasoning statement. Therefore, it is apparent that the learned AO had neither satisfaction of escapement of income nor has recorded reasons on that regard prior to issuance of notice u/s 148 of the Act and, therefore, the notice is required to be quashed. (3) The learned AO has recorded common reasons for the two assessees (1) Shri Tarun K. Mody and (2) the appellant. The reasons recorded are general in nature and not specific for any particular business. The appellant is proprietor of M/s. Gunjan Corporation which had executed the project of Vimal Complex and Ganesh Hall. M/s. Trilok Corporation viz. the partnership firm had completed the project of Triloknath Complex. Bharucha Complex and Siddhivinasyak A B are projects executed by Shri Tarun K. Mody. Therefore, common reason recorded for the assessee and Shri Tarun K. Mody being not specific are arbitrary and hence, bad in law. (4) There was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA No.3606, 3607, 3608 and 3609/Ahd/2007 for AYs 2000-01, 2002-03, 2003-04 and 2004-05 the Tribunal vide order dated 11-06-2010 had quashed the reassessment framed by the learned AO on 29-12-2006 and set aside the order of the learned CIT(A). The relevant portion of the order is reproduced herein below for reference: 12. On perusal of the reassessment order as passed by the Learned Assessing Officer shows that no addition was made in respect of the issue which was recorded for reopening of the assessment. On the other hand reassessment was completed only after disallowing 20% of direct and indirect expenses which were already disclosed in the original return for want of evidences. Apart from making the addition by way of disallowances out of disclosed expenses the only other addition made in re-assessment was for the Assessment Year 2004-05 which was Rs.5 lacs on account of security deposit with Genext Power India Ltd., for obtaining agency business. We thus, find that in the reassessment framed, no assessment was made in respect of which the Learned Assessing Officer recorded his reasons to believe about income escaping assessment. In the above circumstances, in our considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the partners Shri Tarun Mody at Ganesh Hall, Halar, Valsad on 3.1.2006. During the course of the survey proceedings statement u/s.133A/131 of Shri Tarun Mody was recorded in which he has stated that he is a partner in the firm of Triloknath Complex and there are unsold shops and land in the Triloknath complex, Madanwad, Valsad. I have, therefore, reasons to believe that the income of the above firm chargeable to tax has escaped assessment to the extent of the investment value of unsold shops/flats and open land for the A.Y.2001-2002. I, therefore, propose to assess/re-assess the income of the assessee which has escaped assessment for the A.Y.2000-01 by issuing notice u/s.148 of the I.T.Act. Sd/- Mathew Thomas K. ITO, Wd.4, Valsad Date :06-02-2006 . From the above, it is evident that the Assessing Officer has recorded the finding that the return of income was not filed by the assessee-firm. This basic finding is factually incorrect because at page no.7 of the assessee s paper book, the assessee has furnished the copy of the acknowledgement for filing of the return of income for A.Y.2000-2001. Moreover, the Assessing Officer has recorded the finding of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 99-2000 and 2000-01 for identical reasons which are reproduced herein below: In this case, survey action u/s 133A of the Act was carried out in the business premises at Ganesh Hall, Near Kasturba Hospital, Valsad on 3.1.2006. Several incriminating documents were found and impounded u/s 131 (3) of the Act. In his statement u/s. 131 of the Act during the course of survey proceedings on 3.1.2006, it is stated that he has constructed four projects viz. Bimal Complex, Bharucha Complex, Siddhi Vinayak- A B and Triloknath Complex. It is found from the documents impounded u/s. 131 and also from the stamen of Shri Tarunbhai Modi and from the statement of his partner Shri Shivpal J. Mistry that there are several shops and flats in his name which are not accounted for in the books of accounts. In the case of Triloknath Complex, in which he is a partner, the returns of income have not been filed for the last 5 years although they are selling flats and shops year after year. There is also open saleable land in the name of Triloknath Complex. Statements u/s 131 of Shri Dhansukhbhai Garagewala and also of Shri Jagdishbhai Poonamji Sandesha were recorded wherein they have stated that they p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sight, inadvertence or a mistake committed by the Income Tax Officer is based on the principle that the tax payer would not be allowed to take advantage of an oversight or mistake committed by the taxing authorities. (ii) If the information derived is from an external source of any kind, it would include discovery of new and important matters or knowledge of fresh facts which were not present at the time of the original assessment. (iii) Where the information may be obtained even from the record of the original assessment from an investigation of the materials on record, or the facts disclosed thereby or from other enquiry or research into facts or law. (iv) Where the information is as to the proof or correct state of law derived from relevant judicial decisions. 11. In the case before us, none of the above conditions seems to be satisfied since in the reasons recorded there are no adverse comments with respect to any of the issues pertaining to the assessee. Therefore, we hereby quash the order of the revenue passed u/s 147 and 148 of the Act for the assessment year 1999- 2000 and 2000-01. Further, we restrain ourselves from adjudicating the other grounds raised by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Any action on the contrary shall be viewed adversely. Further in respect of pending assessment proceedings also, assessing officers should rely upon the evidence/materials gathered during the course of search/survey operation or thereafter while framing relevant assessment order. From the foregoing instruction, it is clear that it would not be open for A. O. to make an assessment wrongly relying on confessional statement of the assessee. The A. O. would be bound to make an assessment only on the basis of evidence and materials gathered during survey/search operations. 14. The learned AR further relied on the case CIT Vs Khader Khan Son reported in 300 ITR 157 (2008) (Mad.) where it was held as under: Income from undisclosed sources Addition under section 69. Addition based on statement recorded during survey Provision of section 133A does not empower any income-tax authority to examine any person on oath and whatever statement recorded under section 133A is not given an evidentiary value, therefore, addition made under section 69 on the basis of statement recorded under section 133A was not valid. 15. From the facts of the present case before us, it is apparent th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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