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2016 (5) TMI 586 - ITAT AHMEDABAD

2016 (5) TMI 586 - ITAT AHMEDABAD - TMI - Addition to income - scrutiny assessment u/s 143(2) - statement recorded under section 133A - value of the statement taken during the course of survey - Held that:- The issue regarding evidentiary value of the statement taken during the course of survey, has fallen for consideration before the Hon’ble Kerala High Court in the case of Paul Mathews and Sons (2003 (2) TMI 25 - KERALA High Court) held as during the course of survey, the officer could record .....

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against the assessee.

Post survey inquiry statement of PSP recorded under section 131which was on oath - if statement recorded under section 133A was ignored, then, there is a further disclosure by the payer. We find that his statement was recorded from the back of the assessee, and no opportunity to cross-examine the deposer was given to the assessee. Hence, this statement cannot be used against the assessee. We find support from the decision of Hon’ble Supreme Court in the case of .....

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diaries impounded during the course of survey carried at the premises of PSP - even at the premises of PSP, no search was conducted. There was no common documents executed between PSP and the assessee was found, which bears the signatures of both the parties. To the extent common document was found i.e. last entry where assessee has confirmed receipt and put his signature in the diary of PSP , assessee has offered the amounts for taxation. If we evaluate the evidence collected by the AO in shap .....

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Manish Borad, Accountant Member For the Petitioner : Shri Tushar Hemani For the Respondent : Shri Jamesh Kurian, Sr. DR ORDER Per Rajpal Yadav, Judicial Member The assessee is in appeal before us against the order of the ld.CIT(A)-IV, Baroda dated 19.9.2012 passed for the Asstt.Year 2010- 11. 2. Though the assessee has taken six grounds of appeal, but his grievance revolves around two issues, viz. the ld.CIT(A) has erred in confirming the addition of ₹ 85 lakhs, and (b) the ld.CIT(A) has e .....

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assessment and notice under section 143(2) was issued and served upon the assessee on 26.8.2011. A search and seizure operation was carried out in the case of the assessee on 10.9.2010. Similarly, a survey under section 133A of the Income Tax Act was carried out in the case of M/s.Devraj Developers, Amul Diary Road, Anand on 19.2.2010. According to the AO, during the course of survey, various loose papers, small dairies were found and impounded. Statement of Shri Pranav S. Patel (PSP), partner o .....

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Page No.9 of Annexure-A-1 is about payment of ₹ 20,00,000/- to the assesses on 18/12/2009 against the land of there new project known as Dev Shikar. (c) Page No. 7 of Annexure-A-1 is about payment of ₹ 3046000/-on 04/01/2010 and of ₹ 454000/- to the assessee on 04/01/2010 against the land of there new project known as Dev Shikhar. (d) Page No.3 of Annexure-A-1 is about payment of ₹ 2400000/- to the assessee on 30/01/2010 against the land of there new project known as Dev .....

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ispute with regard to the payments received on 22.1.2010 and 5.2.2010. With regard to other payments, he has expressed his ignorance. The ld.AO has made an addition of ₹ 85 lakhs to the income of the assessee on the strength of the statement of PSP as well as on the strength of loose paper/diary found from the possession of PSP. The AO has recorded that since payer has admitted the payment, therefore, the assessee must have received the payments. 4. Dissatisfied with the addition, the asse .....

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here cannot be any question of making any payment to the assessee qua the purchase of land. 5. On the strength of the Hon ble Supreme Court decision in the case of CBI Vs. V.C. Shukla, (1998) 3 SCC 410, it was contended by the assessee that on the basis of diary recovered from a third party, the prosecution cannot establish the guilt of any person, viz. recipient. The assessee had never acknowledged receipt of any payment from PSP. His signature is not available either in the diary or in other l .....

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CIT, 125 ITR 713 (SC) ii) CIT Vs. N. Swamy, 241 ITR 363 (Mad) iii) CIT Vs. P.V. Kalyansundaram, 282 ITR 259 (Mad); iv) Shankerlal Nabhumal HUF & Ors. Vs. DCIT, 80 TTJ (Ahd) 69; 6. On the strength of the above judgment, it was contended by the assessee that burden to prove, demonstrating the fact that the assessee has received payment was on the Revenue. Merely on the basis of documents found from the premises of a third party in the hand writing of the third party, without any cross-confirma .....

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sessee has admitted one of the entries, recorded in the impounded document, then, it is to be presumed that the assessee has received payments mentioned in all other entries. In the opinion of the ld.CIT(A), if genuineness of one entry was accepted by the assessee, then, he cannot challenge other entries. In the second fold of reasoning, the ld.CIT(A) has made reference to the order of the ITAT in the case of Dhunjibhoystud and Agricultural farm, 82 ITD 18. He reproduced the discussion in this c .....

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elonged to third person, and (d) noting in such diary have also been made by the third party. He further contended that signatures of the assessee are available on receipt of payment of ₹ 75 lakhs. In all other entries there is no signature of the assessee. Therefore, inferences drawn by the Revenue authorities are incorrect. It was also pointed by the ld.counsel for the assessee that statement recorded under section 133A of the Income Tax Act during the course of survey has no evidentiary .....

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in the case of Pr.CIT Vs. Chartered Speed Pvt. Ltd., Tax Appeal No.126 of 2015 and Anr. Copies of both decisions have been placed on record. The ld.counsel for the assessee pointed out that in the case of CIT Vs. Abhalbhai Arjanbhai Jadeja (supra), an addition was made by the AO on the basis of a statement recorded during the course of search. The addition was deleted by the ld.CIT(A) and order of the CIT(A) was confirmed. The Hon ble High Court has upheld the order of the Tribunal by observing .....

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as recorded during the course of survey. The contention of the ld.counsel for the assessee on this set of evidence is that this statement has no evidentiary value, hence, it cannot be used against the assessee, because, on the basis of the statement given by PSP even, addition cannot be made in his hand. The issue regarding evidentiary value of the statement taken during the course of survey, has fallen for consideration before the Hon ble Kerala High Court in the case of Paul Mathews and Sons ( .....

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ntiary value. It is simply an information, which can be used for corroboration purpose for deciding any issue in favour or against the assessee. The observations made by the Hon ble Kerala High Court on page no.108 of the journal are worth to note. It reads as under: ..Section 133A(3)(iii) enables the authority to record the statement of any person which may be useful for, or relevant to, any proceeding under the Act. Section 133A, however, enables the income-tax authority only to record any sta .....

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any Income-tax Officer to examine any person on oath. Thus, in contradistinction to the power under section 133A, section 132(4) of the Income-tax Act enables the authorised officer, to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the Income-tax Act. On the other hand, whatever statement is recorded under section 133A of the Income-tax Act it is not given any evidentiary value obviously for the reason that the officer .....

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against the decision of the Hon ble Madras High Court has also been dismissed by the Hon ble Supreme Court. The ld.counsel for the assessee has placed on record copy of the judgment of the Hon ble Supreme Court as Annexure-A with the chart. 11. The next evidence recorded by the AO is that in the post survey inquiry statement of PSP was recorded on 5.3.2010 under section 131 of the Income Tax Act, which was on oath. Therefore, if statement recorded under section 133A was ignored, then, there is .....

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of such evidence is liable to be deleted. In the present case PSP was not subjected cross-examination. His statement was not recorded in the assessment proceeding of the assessee. It was in post-survey inquiry of his own case. Therefore, this piece of evidence is to be excluded. 12. The next set of evidence possessed by the Revenue is loose papers and small diaries impounded during the course of survey carried at the premises of PSP. The explanation of the assessee qua this set of evidence is t .....

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by making a mention that once the assessee has admitted one of the entries in the diary and shown the receipt in his income, therefore, other entries are to be treated at par, and it is to be assumed that the assessee must have taken the payment of other entries also. In our opinion, the ld.CIT(A) has failed to take note of basic principle of law canvassed in the judgment of the Hon ble Supreme Court in the case of CBI Vs. V.C.Shukla (supra). In that decision, the Hon ble Supreme Court has made .....

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cted above. The reason for the admission of the assessee was that the assessee has put his signature on the receipt of the payment in the diary of PSP. Therefore, these entries are all together different from other entries. Here the assessee has confirmed the entry when it was made. The moment the assessee recognized his signature in all these entries and it is established that signatures are of the assessee, then, it is not the entries alone related to PSP, but it becomes joint responsibility t .....

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rtment failed to prove this aspect. The AO has taken the entries of PSP as a gospel truth, and assumed that it is the assessee who has to disprove them, whereas the position of the law is all together otherwise. It is the AO who has to first prove the payments alleged to have been received by the assessee, and only then, explanation of the assessee can be sought. From entries of PSP referred by the AO, this aspect has not been proved. The ld.CIT(A) has heavily relied upon the order of the ITAT, .....

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