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2016 (5) TMI 93 - ITAT CHANDIGARH

2016 (5) TMI 93 - ITAT CHANDIGARH - [2016] 46 ITR (Trib) 367 - Cessation of liability - Addition on the basis of search - Retraction of statement - Held that:- 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 e .....

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tion of facts and material on record, correctly deleted the addition. The decision relied upon by the learned Departmental representative would not support the case of the Revenue because of the facts and circumstances as considered above. We, therefore, do not find any error in the order of the learned Commissioner of Income-tax (Appeals) in deleting the addition. - Decided in favour of assessee. - I. T. A. No. 241/CHD/2014 - Dated:- 20-1-2016 - Bhavnesh Saini (Judicial Member) And Rano Jain (A .....

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e to procedural lapses. Learned counsel for the assessee did not object to the condonation of delay. Considering the above and that learned counsel for the assessee has no objection, the nominal delay in filing the Departmental appeal is condoned. 3. Briefly the facts of the case are that the Assessing Officer noted that the assessee was in the business of purchase and sale of gold, silver and diamond jewellery besides doing labour job work of making jewellery out of gold and new jewellery. A su .....

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r noted that a letter was written by the assessee to Pearl India, New Delhi, regarding cessation of liability worth ₹ 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 ₹ 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 .....

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essment order. Since the statement recorded on oath in response to the summon under section 131 of the Act by the Assessing Officer has evidentiary value and have relevance to ground, therefore, for the sake of clarity and reference, the same is reproduced as under : "Question Please disclose your identity Answer I am Vipin Aggarwal, S/o Late Shri Hari Kishan Dass, aged 50 years, Prop. M/s. Musaddi Lai Hari Kishan Dass, Jewellers, Kasera Bazar, Ambala Cantt. Question During the course of su .....

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r books of account or not. In response, you had replied. At present I am unable to explain the details of this transaction. I am also not able to verify the same with my books. Therefore, I offer this amount of ₹ 90,00,000 (rupees ninety lakhs only) as my additional income over and above my regular income for the assessment year 2009-10 to buy peace of mind. Whereas in the return of income filed by you for the assessment year 2009-10, this additional income of ₹ 90,00,000 (rupees nin .....

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te by account payee cheques. Further, the actual amount outstanding to the said concern was ₹ 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 .....

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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 by him. Had there been any iota of confusion in the mind of the assessee about the statement given by him he could have approached the competent authority to clear his stand within a period non-questionable. The assessee retracted from his statement after three m .....

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ess was not accepted. Similar view was taken in the case of Dr. S. C. Gupta v. CIT [2001] 248 ITR 782 (All) ; [2001] 170 CTR (All) 421. In the case of Surinder Kumar Charanjit Kumar v. CIT [2006] 282 ITR 78 (P&H) ; [2006] 201 CTR (P&H) 37, it was held that the retraction should be at the earliest opportunity or at least within the reasonable time. In the case of Dr. S. S. Gulati v. Deputy CIT (I. T. A. No. 671 of 2009 (P&H)) it was held that where the appellant had himself surrendere .....

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he assessee had signed the document and accepted the cessation of liability in his statement recorded during the course of survey proceed ings. In view of these finding, the Assessing Officer concluded that the retraction made by the assessee from the statement recorded during the survey proceedings in which the surrendered amount of ₹ 90 lakhs was involved was clearly an afterthought and, hence, unacceptable. An addition of ₹ 90 lakhs was made on account of unexplained investment un .....

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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 ₹ 90 lakhs to which the assessee had shown great reluctance. It wa .....

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ount payee cheques in the assessment year 2010-11 and the closing balance as on March 31, 2010, as ₹ 35,10,686.18. The letter was got written in Hindi by someone on behalf of the assessee on the day of survey, i.e., June 23, 2009, which is impounded documents No. 2 and copy of the same is enclosed. The English version of this letter is reproduced as under : To Sh. Gautam Ji, Pearl India, New Delhi According to my books for the financial year ending 31-3-2009, I had shown ₹ 90 lakhs a .....

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t interpolated as March 23, 2009, to make it relevant for the year under consideration. This is clear from the letter reproduced above it looks utopian that the assessee's letter was dated March 23, 2009, the day coinciding with the date of survey. This date was selected to min imise the cutting in the original date June 23, 2009, to make it March 23, 2009, to support surrender. This was the abuse of authority. The language of this letter is totally incorrect. As per this letter, it is writt .....

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hat this is totally contrary with the books of account, secondly, had this letter been sent to the addressee, carbon copy should have been from part of our record and not the original and for such an important communication, it could have been sent by registered post/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 reco .....

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nd 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 133A of the Act and if it has been don .....

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e time of survey and the statement recorded under section 131 on oath at the time of the assessment proceedings are different and differentiated facts in the statement given at two stages. The assessee also distinguished on the facts the case law relied on by the Assessing Officer in the assessment order. Further, the assessee relied on the judgment given by the hon'ble Supreme Court in the case of CIT v. S. Khader Khan Son [2012] 25 taxmann.com 413 ; [2013] 352 ITR 480 (SC) wherein the judg .....

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1139-40, dated December 10, 2012, to verify from the books of account/assessment record/survey record of the assessee vis-a-vis the creditor, M/s. Pearl India Ltd., and submit a report. Simultaneously, a letter No. 1148-49, dated December 11, 2012, was also issued to Pearl India Ltd. (PACL Ltd.), New Delhi, seeking information under section 133(6) of the Act in the assessee's case asking copy of account of the assessee as per the books of Pearl India Ltd. as on March 31, 2009, and March 31, .....

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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 .....

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ter but the letter dated March 23, 2009, written by the assessee, Sh. Vipin Aggarwal to Sh. Gautam Ji, Pearl India, New Delhi, regarding the cessation of liability worth ₹ 90 lakhs of Gautam's company. On this letter Sh. Vipin Aggarwal had signed and cutting of date from June 23, 2009, to March 23, 2009, on which the assessee, Sh. Vipin Aggarwal signed. The contention of the assessee that he was exhausted at 3 a.m. when his statement was recorded is also not worth appreciating because .....

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was again corrected by putting the correct date, i.e., March 23, 2009. It is an afterthought story made by the assessee just to retract the surrender amount. He has also given bifurcation of head-wise surrender amount of each assessment year. 3) On examination of the information submitted by Pearl India Ltd., vide letter dated May 6, 2013, it has been observed that the assessee has made the payment of ₹ 1,00,00,000 through account payee cheques of different dates to M/s. Pearl India Ltd. .....

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i) The Assessing Officer concluded that the assessee-company has given advances for purchase of land to M/s. Mussadi Lai Hari Kishan Dass Jewellers, Ambala Cantt. All the documents submitted by the assessee appears to be manipulated and, hence, not worth considering. The company Pearl India Ltd. has given the accommodation entries to the assessee-appellant just to cover up the transactions. In view of the facts, it is requested that the matter may be decided on the merits. 8. The report of the A .....

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uld 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 2 .....

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after close of the year March 31, 2009, i.e., the date of survey on June 23, 2009. (iii) As per our books of account, the opening balance of the company was ₹ 1,35,10,686.18 and whereas this letter says that as per my books of account for the year ended March 31, 2009, the amount payable was ₹ 90 lakhs. (iv) This letter says that I had already given this amount and nothing remains payable. This does not match with the books of account and there is no trace from where the figure of &# .....

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of the assessee as deposed by him in his duly sworn statement under section 131 during the course of the assessment proceedings. 2. The Assessing Officer in its remand report has admitted that there is a cutting in the date and that the appellant has corrected the date by overwriting and has repeated that date. In the ordinary course of action, no one repeats the dates after correcting the original dates as it is an only official way of certifying the dates. This clearly conveys that this was d .....

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anipulated and how a limited company worth ₹ 14,000 crores showing the net profit of ₹ 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 instruct .....

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xtra 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 ₹ 1,35,10,686.18 was still outstanding on the date of survey and was paid later on. The appellant also relied upon the decisions of the Income-tax Appellate Tribunal, Chandigarh Bench, in the case of Naresh Kumar Verma v. Asst. CIT [2013] 32 taxmann.com 280 (Ch .....

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ion 133A was not at par with the statement under section 132(4) and did not have that evidentiary value, such statement cannot be held to be irrelevant material so as to be ruled out of consideration in totality of facts, particularly in the absence of regular books of account. The assessee failed to produce the books of account or any other authentic contemporaneous evidence of agricultural income. In the present case, the above decision of the Punjab and Haryana High Court is not applicable as .....

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High Court of the Punjab and Haryana has declined to entertain the appeal. As regards the case of Dr. S. S. Gulati v. Deputy CIT (supra), the facts of this case too are totally different to the facts of the appellant case and, hence, this judgment too as relied upon by the Assessing Officer does not supports the case of the Assessing Officer. 9. The learned Commissioner of Income-tax (Appeals) considering the submissions of the parties, remand report and material on record deleted the entire ad .....

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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 ₹ 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 ₹ 90 lakhs for taxation in its return filed for .....

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686.18. In response to the second query when the Assessing Officer questioned referring to the document that the same was written by you please intimated as to whom the said paper belongs to. Sh. Vipin Aggarwal replied that he does not know as to whom it belongs to and how he has signed it. This statement was not accepted by the Assessing Officer and the Assessing Officer noted that the appellant has not intimated the Department about the genuineness of the statement given by him between the per .....

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akhs on account of unexplained investment under section 69 of the Act. 5.12 During the appellate proceedings, the appellant submitted that the document was fabricated, did not belong to the appellant and the statement given on the basis of the query raised on document was given under stress and duress. The appellant submitted that as per the language of the letter the contents are factually incorrect as the letter shows the payable amount of ₹ 90 lakhs for the year ending March 31, 2009, w .....

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sent this letter was available on record, no proper address of the company in Delhi was written on the letter. That date on signature had been interpolated and got repeated in such a manner which clearly reflects that this letter was engineered to enhance the surrendered amount. The date of the letter below the signature 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 .....

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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 .....

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and the closing balances as shown in the books of account. The Assessing Officer concluded that the company, Pearl India Ltd., has given the accommodation entry to the appellant to cover up of the transaction and submitted that in view of the facts of the case the matter may be decided on the merits. The appellant in its rejoinder again reiterated that no such letter existed in his record till the time of survey. It was only created during the course of survey to extract more surrender. The appe .....

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re coincidence. The content of the letter says for the year ended March 31, 2009, whereas the letter after correction is supposed to be signed on March 23, 2009. The language of the letter depicts that such language can be only after the close of the year, i.e., March 31, 2009. Further, the amount payable in the letter is shown to be ₹ 90 lakhs whereas as per the appellant's books of account the opening balance was ₹ 1,35,10,686.18. The accounts for the subsequent period also sho .....

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s 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 .....

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he was also not able to verify the same with his books and, therefore, he offered the amount of ₹ 90 lakhs as his additional income over and above his regular income for the assessment year 2009-10 to buy peace of mind. This shows that the document in question was not verified with the books of account. There was no finding of the survey team about the balances as per the books of account. The statement of the appellant showing that he wants to offer income to buy peace of mind shows his s .....

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ith Pearl India Ltd. Rather, the inquiry conducted at the appellate stage shows that the appellant had running account and there exists, opening and closing balances in the account as per the books of account of Pearl India Ltd. 5.16 It is worthwhile to quote the circular issued by the Central Board of Direct Taxes dated March 10, 2003, which reads as follows : 'Instances have come to the notice of the Board where the assessee have claimed that they have been forced to confess the undisclose .....

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t been disclosed or is not likely to be disclosed before the Income-tax Department. Similarly, 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. Further, in respect of the pending assessment proceedings also, the Assessing Officer should rely upon the evidences/materials gathered during the course of search/survey operations .....

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preme 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 .....

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he hon'ble Supreme Court, I am of the view that the addition of ₹ 90 lakhs made on the basis of the questionable document and the statement recorded during the course of survey under section 133A at the premises of the appellant which has not been corroborated with any further finding or any other evidence from the third party is not justified. Hence, the addition of ₹ 90 lakhs is deleted. This ground of appeal is allowed." 10. The learned Departmental representative relied .....

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statement around three months, therefore, retraction was not valid. (i) On the other hand, learned counsel for the assessee reiterated the submissions made before the authorities below and referred to various documents from the paper book to show that the seized paper book page 82 was fabricated and did not lead to any payment of ₹ 90 lakhs. He has submitted that seized paper is not corroborated by any evidence because M/s. PACL Ltd. has shown the amount outstanding in their books of accou .....

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ment was justified and relied upon the order of the Income-tax Appellate Tribunal, Chandigarh Bench, in the case of Sanjeev Kumar v. ITO [2014] 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 .....

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s) 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 ₹ 90 lakhs whereas as per the assessee's books of account (paper book 8 sundry creditors) as per the books of account of the assessee, the balance was ₹ 1.35 crores. The accounts for subsequent period also show that the as .....

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ed on record also support the explanation of the assessee. The Assessing Officer also obtained information directly from M/s. PACL Ltd., New Delhi, through notices under sections 133(6) and 131 which shows that there were running accounts with the assessee and M/s. PACL Ltd. has shown in its account the payment received on subsequent dates. The learned Commissioner of Income-tax (Appeals) also noted that there is a considerable force in the submission of the assessee because when original seized .....

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question was not verified from the books of account of the assessee. There was also no finding of the survey team about the balances as per the books of account of the assessee. The learned Commissioner of Income-tax (Appeals), therefore, rightly considered the Board's circular that in such a situation, the confessional statement should not be obtained because it should be based on credible evidences. 12. The hon'ble Punjab and Haryana High Court in the case of Krishan Lal Shiv Chand Ra .....

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