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TMI Blog2016 (5) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... des doing labour job work of making jewellery out of gold and new jewellery. A survey operation under section 133A(1) of the Act was conducted at the business premises of the assessee on June 23, 2009. During the course of the survey operation inventories of cash, stock and the list of cheque books/pay in slips, etc., found at the business premises of the assessee were prepared. Certain incriminating documents were found, which were impounded. The statement of Sh. Vipin Aggarwal, the proprietor of the business, was recorded. From the impounded documents, the Assessing Officer noted that a letter was written by the assessee to Pearl India, New Delhi, regarding cessation of liability worth Rs. 90 lakhs which was being shown as standing by the assessee in his return. As a result of the survey operation, the assessee offered an additional income of Rs. 2.25 cores over and above his regular business income for the assessment year 2009-10 and the assessment year 2010-11 on account of discrepancy in stock and cash payment out of books and admission with respect to cessation of liability of Rs. 90 lakhs. (i) The Assessing Officer noticed that the assessee had shown only income to the tun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tual amount outstanding to the said concern was Rs. 1,35,10,686.18. Question During the course of survey, the document as referred to above was found from your business premises, and I am showing you the same, which was duly signed by you during the course of survey operations. If the same has not been written by you, as stated by you in the earlier reply, please intimate as to whom the said paper belongs to. Answer I do not know as to whom does it belongs to and how I have signed it. Sd/- (Vipin Aggarwal) The statement given by me as above is at my own and without any duress pressure. Further, certified that the particulars recorded/given as above are correct and true to the best of my knowledge and nothing has been concealed therein. Sd/- (Vipin Aggarwal)." (ii) The statement of the assessee was not accepted by the Assessing Officer and noted that the assessee retracted from his statement while filing the return of income from the year under consideration which was filed on September 30, 2009. During the intervening period of more than three months, the assessee had in no manner oral or written intimated the Department about the genuineness of the statement given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as under : "The brief facts of the case are that the survey under section 133A(1) at the business premises of the appellant was conducted on June 23, 2009, which relate to the assessment year 2010-11 and the additional income of Rs. 1,35,00,000 was got declared relevant to the assessment year 2010-11. But after the conclusion of survey, the survey officer in charge discussed the same with his senior boss about survey on phone and on further instructions he directed the appellant that this additional income has to be revised at higher figure but by that time all the calculations in respect of stock and cash had already been made and there was no way out to increase the additional income. A strategy was chalked out to have additional surrender of Rs. 90 lakhs to which the assessee had shown great reluctance. It was already 3 a.m. of the next morning and the appellant was totally exhausted and depressed. To increase the surrender amount, a false piece of evidence was created to the effect that the assessee had repaid a sum of Rs. 90 lakhs to one of its creditors, M/s. Pearl India Ltd., whose credit balance as on the day of the survey was Rs. 1,35,10,686.18 brought forward from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t/courier and receipt thereof should have been stitched with this letter. No such evidence was available, more so this was original letter said to have been written on March 23, 2009, then why the original letter was lying in our record, no word o/c (office copy) was written on this letter, no receipt of having been sent this letter is on record, no proper address of this firm in Delhi has been written on the letter. The date on signatures had been interpolated and got repeated the same clearly reflects that this letter was engineered to enhance the survey and as such this is contrary to the spirit of section 133A of the Income-tax Act and the Board's circular on the subject. The facts mentioned in this letter are oral and do not tally with the books of account and as such the statement recorded during the course of survey about this letter was also involuntary and inaccurate obtained to justify the surrender, when the basis of evidence is unreal and created. The statement of the assessee based on this evidence is also unreal having no evidentiary value. 5. The assessee further submitted that the Assessing Officer is not authorised to record statement on oath under section 133 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as issued to Pearl India Ltd., New Delhi, requiring the ledger for the assessment years 2009-10 and 2010-11 and the audited balance-sheet for the assessment years 2009-10 and 2010-11. In response to the notice under section 131 of the Act, PACL Ltd. replied and enclosed the audited balance-sheet for the assessment years 2009-10 and 2010-11. The informations received in response to notices under section 133(6) and under section 131 of the Act, the same were again forwarded to the Assessing Officer, vide this office letter No. 67, dated April 9, 2013, to verify the facts from the books of account/assessment record and the balance-sheet of Pearl India Ltd., New Delhi. (i) A report was called from the Assessing Officer on the written submission filed by the assessee and information received from Pearl India Ltd., vide this office letters dated December 10, 2012, and April 9, 2013, respectively. The Assessing Officer submitted a report dated June 10, 2013, the relevant points brought in the report are as under : 1) As regards, the false piece of evidence and cutting on the date, it is submitted that this is not the surrender letter but the letter dated March 23, 2009, written by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the merits. 8. The report of the Assessing Officer was supplied to the assessee to furnish its comments. The salient points brought in by the assessee on the Assessing Officer's report are as under : 1) No such letter existed in our records till the time of survey. It was only created during the course of survey proceedings to extract more surrender. The following circumstances prove the fact- (a) This letter has been got addressed to a person of the rank of clerk which is never possible as such an important communication could only be made to the managing director or any important person in a limited company. This should have been properly addressed. (b) The contents of this letter are totally incorrect : (i) It has been said that the said letter was written by the appellant on March 23, 2009. There could be very remote coincidence that this date could be March 23, 2009, would match with the date of survey, i.e., June 23, 2009. The theory of probability says that the chances of matching March 23, 2009, with June 23, 2009, could only be 1/365. (ii) The language of the letter is totally incorrect and contradictory to the facts of the case. This letter says that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... howing the net profit of Rs. 70,87,26,275 could give accommodation entries to the appellant to cover up the transactions. (i) The assessee also referred to the Central Board of Direct Taxes Instruction F. No. 286/2/2003 IT (Inv. II), dated March 10, 2003, on the subject "confession of additional income during the course of search and seizure and survey operation" wherein the Central Board of Direct Taxes has instructed as under : "While recording the statement during the course of search and seizure and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely." The surveying officer has acted in complete disregard to the Central Board of Direct Taxes Instructions. If the surveying team had really collected some evidence it should have been left to be appreciated at the time of assessment and not to enforce extra surrender. The evidence collected by the Commissioner of Income-tax (Appeals) by way of inquiry and also collected by the Assessing Officer during the remand proceeding supports the contention of the assessee that the amount of Rs. 1,35,10,686.18 was still outstanding on the dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant, remand report of the Assessing Officer and the rejoinder filed by the appellant. It is gathered that the Assessing Officer has made addition of Rs. 90 lakhs on account of additional surrender during the course of survey on June 23, 2009. This surrender was on the basis of document impounded during the course of survey where the appellant, Sh. Vipin Aggarwal, wrote a letter to Shri Gautam Ji, Pearl India, New Delhi, that according to his books for the financial year ending March 31, 2009. He had shown Rs. 90 lakhs as payable which in fact he had already paid and nothing remains payable. The document was signed by Sh. Vipin Aggarwal and the date was mentioned as June 26, 2009, corrected as March 23, 2009. The appellant did not offer Rs. 90 lakhs for taxation in its return filed for the assessment year 2009-10 on September 30, 2009. During the course of the assessment proceedings, the Assessing Officer again recorded the statement on oath by issuing summon under section 131 of the Act where Shri Vipin Aggarwal stated that he was totally exhausted and depressed and he could not make out what statement he was giving. The document was not in his handwriting and has never written by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was written as June 23, 2009, which after correction was written as March 23, 2009. Since the complete date was not changed so the date of survey was corrected in such a manner to give it another month with least cutting and which would pertain to the assessment year 2009-10. The appellant further relied on the Central Board of Direct Taxes circular and judicial pronouncements wherein the hon'ble courts held that the Assessing Officer is not authorised to record statement on oath under section 133A and if such statement has been recorded under section 133A of the Act, it has no evidentiary value. The appellant further emphasised that the statement recorded on oath under section 131 at the time of the assessment proceedings was not considered. The appellant also relied on the decision of the hon'ble Supreme Court in the case of CIT v. S. Khader Khan Son (supra). 5.13 At the appellate proceedings stage, the information under section 133(6) and under section 131 were sought by my predecessor and such information gathered in the form of copies of statement of account of the appellant as on March 31, 2009, and March 31, 2010, and the audited balance-sheet of Pearl India Ltd., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here were running accounts with the appel lant and Pearl India Ltd. has shown in its account the payments received on the subsequent dates. The appellant's submission is also considerable that in such situation the original handwritten paper would not remain in the appellant's office rather there could have been a copy and acknowledgment receipt. These facts support the contention of the appellant that the document in question does not belong to the appellant. 5.15 Regarding the statement recorded during the course of survey as well as during the course of the assessment proceedings, it is noted on examination of statement recorded at the time of survey that it shows there was a break in recording the statement, signature of the appellant were taken and, thereafter, the recording of statement was continued on question pertaining to the document regarding the cessation of liability. In answer to the query in the statement recorded at the time of survey the appellant had replied that at present he was unable to explain the details of transactions, he was also not able to verify the same with his books and, therefore, he offered the amount of Rs. 90 lakhs as his additional i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant assessment orders.' Even the Central Board of Direct Taxes has taken cognizance of such instances which compel to issue the advisory circular that while recording the statement during the course of search and seizure and survey operations no attempt should be made to be obtained confession to the undisclosed income. 5.17 In the decision given in the case of Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 (SC), the hon'ble Supreme Court held that an admission is extremely an important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect. In a recent judgment in the case of CIT v. S. Khader Khan Son [2013] 352 ITR 480 (SC), the hon'ble Supreme Court upheld the finding of the Madras High Court that section 133A does not empower any Income-tax Officer to examine any person on oath, so the statement recorded under section 133A has no evidentiary value and any admission made during such statement cannot be made basis of the addition. The word 'may' used in section 133A(3)(iii) makes it clear that the material collected and the statement rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14] 31 ITR (Trib) 680 (Chandigarh). 11. We have considered the rival submissions and perused the material on record. The copy of the seized paper is filed at page 82 of the paper book. The learned Commissioner of Income-tax (Appeals) correctly noted that date has been corrected in the same by over writing the date, has been repeated below on the letter. The date of survey was June 23, 2009, and corrected date was March 23, 2009, which could not be said to be mere coincidence. The contents of the seized paper say that "for the year ending March 31, 2009", whereas the letter after correction is supposed to be signed on March 23, 2009. The language of the letter shows that such language could only be written only after the close of the year, i.e., March 31, 2009. The findings of fact recorded by the learned Commissioner of Income-tax (Appeals) are correct and based on proper appreciation of the seized paper. If a person is writing such a letter on March 23, 2009, he cannot anticipate what would be due on later date on March 31, 2009. Further, the amount payable as per the seized paper was shown at Rs. 90 lakhs whereas as per the assessee's books of account (paper book 8 sundry cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. v. State of Kerala [1973] 91 ITR 18 (SC) held that "the assessee should be given opportunity to show that the admission is incorrect or does not show the correct state of facts". The Income-tax Appellate Tribunal, Chandigarh Bench in the case of Sanjeev Kumar v. ITO (supra) held as under (headnote) : "Held, allowing the appeal, that the addition was made without proper evidence and merely on the basis of a statement recorded during the survey, which could not be sustained. No proper enquiry was conducted. Therefore, the addition made was to be deleted." 13. Considering the facts of the case in the light of the above discussion, it is clear that the seized paper (paper book page 82) is not reliable, did not show the correct state of affairs and the same is not corroborated by any independent evidence. There is interpolation of the date in the same and the language contained therein clearly show that the letter is not disclosing the correct facts. It is also not explained why the original letter remained with the assessee and how the payment of Rs. 90 lakhs have been verified. M/s. PACL Ltd. did not confirm alleged payment. Therefore, the assessee had a justification to retr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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