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2016 (3) TMI 321 - ITAT CHENNAI

2016 (3) TMI 321 - ITAT CHENNAI - TMI - Addition on the basis of admission during the course of survey - Held that:- In the present case, it is an admitted fact that the assessee retracted the statement recorded u/s.133A of the Act vide its letter dated 1.4.2009 stating that the Income-tax team visited the assessee’s residence, when he was conducting pooja on 13th day of death ceremony of his grand father and he was also starting abroad on the same day. He required to proceed to abroad at 3.30 P .....

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of the ld. AR is supported by the judgment of the Supreme Court in the case of CIT v. S. Khader Khan Son (2013 (6) TMI 305 - SUPREME COURT ), wherein the judgment of the Jurisdictional High Court in the case of CIT v. S. Khader Khan Son (2007 (7) TMI 182 - MADRAS HIGH COURT) has been confirmed, by observing that sec.133A does not empower IT authority to examine any person on oath, hence any such statement has no evidentiary value and any admission made during such statement cannot, by itself, b .....

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ors. They are not only agriculturists but also traders. Being so, he relied on the decision of the Tribunal in the case of Keerthi Agro Mills (P) Ltd. (2015 (5) TMI 1014 - ITAT COCHIN) is not appropriate. In that case, there was a payment of ₹ 23,17,32,420/-, which is purchases of paddy by cash payment in respect of 14,744 parties. The assessee has never given the name and address of the parties and not produced the parties before the assessing authority. Identity was also not proved and t .....

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ri Ramanathan is not solely agricultural produce and they are trading also. There is no dispute in this fact and the provisions of Rule 6DD cannot be applied - Decided against assessee - ITA No. 269/Mds/2014 - Dated:- 10-2-2016 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER For The Appellant : Shri T. Vasudevan, Advocate For The Respondent : Shri A.V.Sreekanth, JCIT ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER This appeal by the assessee is directed against .....

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course of survey, the assessee made voluntary admission of ₹ 30,00,000/- and agreed to pay tax demand on or before 31.3.2009. However, on 1.4.2009, the assessee filed a retraction letter stating that as he was in a hurry to leave the place for a foreign trip, he offered ₹ 30 lakhs as income without applying his mind, at the time of inspection. It was also stated that the sworn statement was given in a confused state of mind in the situations prevailed at his residence. However, the .....

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my premises. I can only say that all these are accounted, however, I am ready to offer total income of Rs. .30,00,000/- and I am ready to pay the tax on or before 31.03.09 According to the Commissioner of Income-tax(Appeals), the above statement shows that the assessee had admitted an income of ₹ 30 lakhs during the course of survey and the assessee pleaded that further stock need not be taken as he was in a hurry to board a flight to overseas destination on the same day. Therefore, the A .....

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the AO. Against this, the assessee is in appeal before us. 5. We have heard both the parties and perused the material on record. We have carefully gone through the statement recorded on 25.3.2009. In that statement, the assessee offered additional income of ₹ 30 lakhs for the assessment year 2008-09 and vide question No.5, the assessee answered as follows: 5. From your premises we have traced out some chita books, sale and purchase bills and some loose papers. Can you explain the transacti .....

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. i.e. A.Y. 2009-10. From your findings of the loose sheets of bills found in my premises. I can only say that all these are accounted, however, I am ready to offer total income of ₹ 30,00,000/-, and I am ready to pay the tax on or before 31.03.09. 5.1 As seen from the above, there is no corroborative material to support the addition of ₹ 30 lakhs except the sworn statement. No material was found to prove that there was undisclosed income or any inflation of expenditure. Only on the .....

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recorded u/s.133A of the Act is not a conclusive evidence. Further, it was held by the Supreme Court in the case of Pullangode Rubber Produce Co. vs. State of Kerala And Anr. (91 ITR 18), that an admission is extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the person who made the admission to show that it is incorrect. In the case of Saveetha Institute of Medical and Technical Sciences v. ACIT (2011) [12 (Trib) 376] (Chen), wherein addition toward .....

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ence. Therefore, it is well settled judicial proposition that merely on the basis of statement which is not supported by the Department and cogent material cannot be a valid addition basis for sustaining such adhoc additions. It is the burden of the Department to prove that there existed relevant and cogent material to enable the AO to make such additions. The Department has grossly failed to prove or demonstrate existence of any such relevant or cogent material supporting the addition. The asse .....

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isclosures, it wants them to be based on incriminating material. 6. In the present case, it is an admitted fact that the assessee retracted the statement recorded u/s.133A of the Act vide its letter dated 1.4.2009 stating that the Income-tax team visited the assessee s residence, when he was conducting pooja on 13th day of death ceremony of his grand father and he was also starting abroad on the same day. He required to proceed to abroad at 3.30 P.M. and he was in tension by the disturbance of t .....

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e Court in the case of CIT v. S. Khader Khan Son (352 ITR 480), wherein the judgment of the Jurisdictional High Court in the case of CIT v. S. Khader Khan Son (300 ITR 157) has been confirmed, by observing that sec.133A does not empower IT authority to examine any person on oath, hence any such statement has no evidentiary value and any admission made during such statement cannot, by itself, be made the basis for addition. Accordingly, this ground of appeal of the assessee is allowed. 8. Next gr .....

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rcantile Bank and Shri Ramanathan is having bank account with Syndicate Bank. Both of them have agricultural lands in addition to trading activity. They informed that they used to receive the payments by cash as per the bills in single payment. Though they are doing some agricultural operations, they are mainly copra traders. Thus, the AO invoking the provisions of sec.40A(3), disallowed a sum of ₹ 14,34,188/- out of ₹ 15,34,188/- in respect of Shri Dhakshinamoorthy and ₹ 19,46 .....

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ess expenditure for allowance within the precincts of the law. He relied on the decision of the Tribunal, (Third Member), Cochin Bench in the case of M/s. Keerthi Agro Mills (P) Ltd. v. ACIT in ITA Nos.145/Coch/2014 dated 7.5.22015 for the assessment year 2010-11 stating that there cannot be any demand for invoking the provisions of sec.40A(3) of the Act. 11. We have heard both the parties and perused the record. Section 40A(3) of the I.T. Act deals with expenses or payments not deductible in ce .....

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eds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure. The proviso to the sub-section is not material. A plain reading of the section makes it clear that any amount expended by an assessee exceeding the sum of ₹ 20,000/- unless the payment has been made in the manner provided in the sub-section, shall not be deducted in computing the assessee s total income arising from profits and gains of business or profession. However Rule 6DD provides certain excepti .....

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y:- (a) where the payment is made to - (i) the Reserve Bank of India or any banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949); (ii) the State Bank of India or any subsidiary bank as defined in section 2 of the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959). (iii) any co-operative bank or land mortgage bank. (iv) any primary agricultural credit society or any primary credit society as defined u/s. 56 of the Banking Regulation Act .....

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r any other bank; (iv) a bill of exchange made payable only to a bank; (v) the use of electronic clearing system through a bank account; (vi) a credit card. (vii) a debit card. Explanation - For the purposes of this clause and clause (g), the term bank means any bank, banking company or society referred to in sub-clauses (i) to (iv) of clause 9a) and includes any bank (not being a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), whether inco .....

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ulture or apiculture. to the cultivator, grower or producer of such articles, produce or products; (f) where the payment is made for the purchase of the products manufactured or processed without the aid of power in a cottage industry, to the producer of such products; (g) where the payment is made in a village or town, which on the date of such payment is not served by any bank, to any person who ordinarily resides, or is carrying on any business, profession or vocation, in any such village or .....

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om salary in accordance with the provisions of section 192 of the Act, and when such employee - (i) is temporarily posted for a continuous period of fifteen days or more in a place other than his normal - place of duty or on a ship; and (ii) does not maintain any account in any bank at such place or ship. (j) where the payment was required to be made on a day on which the banks were closed either on account of holiday or strike; (k) where the payment is made by any person to his agent who is req .....

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rce. 12. From the above provisions, it is clear that in order to fall within the exemption clause, the assessee has to make payment in excess of ₹ 20,000/- by account payee cheque or by demand draft. The assessee shall prove that it would have caused genuine difficulty to the payees having regard to the nature of transactions. The assessee shall prove with evidence to the satisfaction of the AO and establish the genuineness of the payment and identity of the payees. Therefore, the burden o .....

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