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2016 (5) TMI 1157 - ITAT JAIPUR

2016 (5) TMI 1157 - ITAT JAIPUR - TMI - Addition on account of entries found noted during the course of survey - Admission in statement during search - Held that:- The additional income offered at ₹ 9,38,50,009/- is computed on the basis of a document prepared at the end of the previous year relevant to assessment year under appeal and the loose paper under reference contained the entries prior to the end of the previous year, thus the same stood covered in the memoranda state of affairs a .....

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be to take each entry, quantify each and make separate addition for each. It is very unjustified to add the surrender and further add each item, this amount to double jeopardy which is not permissible. Looking at the entirety of circumstances and fact that the assessee enhanced his surrender from ₹ 3,50,42,961/- to ₹ 9,38,50,009/-; the fact that the balance sheet reflects the sum total of his transactions as on 01.04.2008, it is not justifiable to add the totals of both the balance s .....

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e as on 01.04.2008. Ld. DR could not dispel such factual findings. Further it is found that assesee’s cash balance as per balance sheet is ₹ 18,20,852/- and this amount being the interest income of the assessee during the year has been included in this cash balance on the basis of which the surrender has been made. In our considered view the impugned addition of ₹ 3,45,000/- has been rightly deleted by ld. CIT(A), which order deserves to be upheld - Decided against revenue

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assessee son, in reply to question No. 18 of the statement categorically stated that these entries related to the purchases of plot of land in his own name for a total consideration of ₹ 45,40,200/-. In reply to question No. 23 also NLA admitted amount ₹ 30,40,200/- as his undisclosed investment. In our view without dislodging NLA’s clear statement,, ld. AO made an addition of ₹ 32,43,730/- in this behalf in the hands of assessee on surmises. There is no merit in sustaining the .....

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revenue - ITA No. 827/JP/2011, ITA No. 1042/JP/2011, ITA No. 104/JP/2014 - Dated:- 26-4-2016 - SHRI R.P.TOLANI, JM & SHRI VIKRAM SINGH YADAV, AM For The Assessee : Shri Manish Agarwal and Shri O.P. Agarwal, CA For The Revenue : Raj Mehra, JCIT -DR ORDER PER R.P. TOLANI, JM:- The assessee and Revenue have filed the cross appeals against the order of the ld. CIT(A)-1, Jaipur dated 09-02-2011 for the assessment year 2008-09 on quantum additions. Besides, assessee is also in appeal against the o .....

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alleging the same as undisclosed investment in purchase of property in the name of assessee's son Shri Narain Agarwal. 1.1 That the ld. CIT(A) has further erred in ignoring various submissions made and evidences adduced and also by ignoring the income admitted and declared by the assessee, thus the addition of ₹ 32,43,730/- so confirmed by ld. CIT(A) deserves to be deleted. ITA No. 1042/JP/2011 - A.Y. 2008-09 (Revenue ) Whether on the facts and in the circumstances of the case and in .....

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red substantially more income than declared in survey statement, still huge additions have been further made by ld. AO. In this backdrop the brief facts as narrated and appearing from record are - the assessee is proprietor of a concern M/s Agarwal & Co. engaged in the manufacturing & trading of Jewellery. Survey operation u/s 133A were carried out at the business premises on 12.09.2008, in the course thereof some incriminating documents were impounded main document being A-24 a balance .....

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appeal after considering the material available on record and contentions ld. CIT(A) allowed part relief to the assessee. 3.3 Aggrieved on respective grievances, assessee as well as the department is in respective appeals. 4.1 By ground no. 1, department has challenged the relief granted by the Ld. CIT(A) qua the quantification of said Annexure 24 reducing it by ₹ 2,13,15,248/-. Ld. DR relied on the order of ld. AO and filed written submissions dtd. 16-2-16 forwarded by ld. ACIT, Cir. 1, .....

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e, it was only logical that the duplicate balance sheet be considered in addition to the original balance sheet. As is evident from the assessment order, the liabilities of the duplicate balance sheet found during the course of survey were attempted to be verified by the Assessing Officer and sufficient opportunity was given to the A.R. in this regard. The CIT (A)-I, Jaipur has also mentioned this fact in the appellate order that the assessee did not discharge his onus to the extent that he did .....

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alance sheet filed with the original return is incorporated in the duplicate balance sheet. On the basis of the assets side, it can be clearly established that the duplicate balance sheet has been maintain in addition to the regular balance sheet. Still the relief of deducting common liabilities of ₹ 1,06,68,208/- was given to the assessee on the basis of the directions issued by the then Additional CIT, Range1,Jaipur u/s 144A. Hence, the common liabilities were worked out and relief to th .....

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d presuming that there was some overlapping of the amount against the head stock in both the balance sheets and on the basis of the directions u/s 144A, of the Addl. CIT, Range-1 Jaipur . Further the addition of ₹ 3,45,000/- was made on account of undisclosed income surrendered during the survey proceedings on account of loans and advances which is also discussed in the order. The addition of ₹ 31,065/- was the disallowance on account of motor car expenses and depreciation on car for .....

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,48,60,186.00 Less: Income already declared (before deduction u/s 80C) (PB 42) 10,10,177.00 9,38,50,009.00 During the course of survey assessee explained that the Ann. 24 was a combined balance sheet of accounted and unaccounted books. Based on information available at the time of survey and subject to verification of further documents, assessee during survey declared additional income of ₹ 3,50,42,961/- for A.Y. 2009-10 and ₹ 75,22,019/- for A.Y. 2008-09. On verification assessee fo .....

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Ann. 24 impounded during the course of survey. It contained the details of the transactions disclosed in the regular return along with intermixed unaccounted assets and liabilities. Assessee by letter dated 14.09.1010, filed during the course of assessment proceedings, suo motu increasing the additional income, furnished all relevant details and working of the undisclosed income which is placed on PB 14-15. The assessee thus discharged his onus to effectively explain the working of additional i .....

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e liabilities and the residual figure appears termed as Capital . The calculation of the additional income declared by the assessee is the balancing figure of the total of assets entries in Ann-24 minus the total of the asset side of the Balance Sheet furnished with original return. 4.3 Assessee categorically stated maintaining of two sets of books i. one for all finalized transactions based on which return of income was filed and ii. the other one prepared for total transactions of the business .....

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working of the common entries:- Regular Balance Sheet - total of Assets side not mentioned: 10,25,81,794/- Less: The Liabilities not mentioned in regular Balance Sheet: 1,07,36,661/- Net Difference 9,18,45,133/- It was contended that as against this assessee has offered additional income amounting to ₹ 9,38,50,009/- which is more than ₹ 9,18,45,133/-. Ld. AO, however without cogent reasons and justification interfered with the specific and binding statutory directions of Adl. CIT u/s .....

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assets side which would be akin to going rounds in circles unnecessarily. Here it is important to mention that the liability side is taken as base here because the common liabilities are clearly identified. Thus Ld. AO instead of being objective about working and entry specific used the convenient course of making sweeping, general and used following presumptive terms to make double addition: presuming that there was some overlapping of the amount against the head stock in both the balance sheet .....

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ne would a single entry find place in one balance sheet or in both the balance sheet? Ld. AO herself found common names/entries amounting to ₹ 1,06,68,208/- which find place in both the balance sheets. It demonstrates that the accounted and unaccounted balance sheets are interdependent, intermixed and complimentary to each. The sole incriminating paper PB7 is relied by ld. AO, based thereon, whereas assessee offered additional income of ₹ 9,38,50,009/- which is much in excess of the .....

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e in the assets and liabilities shown in the paper impounded during the survey is one of the recognized, reasonable and scientific method for working out additional income. The working provided by assessee is thus based on facts based on the recognized, reasonable and scientific method. Thus the deference offered by assessee on bona fide basis can be reasonably considered to be the additional undisclosed income and not by extrapolating it on conjectures and surmises. More particularly when it is .....

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redence it will be found that instead of taking the document as a whole it has been used in piece meal basis which is not permissible in the eyes of law as an impounded document is to be holistically considered. 4.4 Ld. CIT(A) appreciated these facts and submission made by the assessee and given a finding of fact that the balance sheet filed with the original return is part of the Ann-24 balance sheet found during the course of survey by observing at page 5& 6 para 4.11 & 4.12 of his ord .....

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ce, for the purpose of the income tax department. 4.12 In view of the fact that the assessee has surrendered the amount as per the balance sheet showing the sum total of his transactions as on 01.04.2008, it is not rational nor justifiable as per accounting principles to add the totals of both the balance sheet. Particularly when it is clear on verification of both the balance sheets that the one filed for income tax purposes is incorporated in the actual one found during the course of survey. T .....

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survey - Scope of section 133A - Difference between sections 133A and 132(4) - Statement in survey operations - Not conclusive piece of evidence - Statement by partner in survey operations regarding undisclosed income of firm - Subsequent retraction of statement by firm - Amount disclosed by partner not assessable as income of firm - Income Tax Act, 1961, ss. 132, 133A. Paul Mathews and Sons Vs. CIT (Ker.) 263 ITR 101 The provision also enables the income-tax authority to impound and retain in h .....

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y be useful, but does not authorize taking any sworn statement. On the other hand, we find that such a power to examine a person on oath is specifically conferred on the authorised officer only under section 132(4) of the Income-tax Act in the course of any search or seizure. Thus, the Income-tax Act, whenever it thought fit and necessary to confer such power to examine a person on oath, the same has been expressly provided whereas section 133A does not empower any Income-tax Officer to examine .....

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and to take any sworn statement which alone has evidentiary value as contemplated under law. Therefore, there is much force in the argument of learned counsel for the appellant that the statement elicited during the survey operation has no evidentiary value and the Income-tax Officer was well aware of this. 4.6 Ld. Counsel further contends that the assessee is an ordinary business person neither well worse and nor a technical expert on the intricacies of Income Tax Laws, a suo motu excess discl .....

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be abided by revenue authorities during assessments, survey and search which is duly published in print, electronic media as well as CBDT s national portal. It has been declared that the income tax authorities have to act strictly in accordance with charter while exercising their powers including Survey And Search action. To buttress his arguments, Ld. Counsel in written submissions has referred to the speech given by the Hon ble Finance Minister on the floor of Parliament in this behalf, while .....

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nk of joint Commissioner of Income Tax. Finally, books of account impounded during survey will not be retained beyond ten days, without the prior approval of the Chief Commissioner . The CBDT vide instructions No. F.No. 286/2/2002-IT(Inv.) dated 10.03.03 has further clarified the assertion made by the Hon ble Finance Minister in budget speech which reads as under:- Instances have come to the notice of the Board where assessee have claimed that they have been forced to confess undisclosed income .....

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isclosed before the income tax department. Similarly, while recording statement during the course of search and seizure operation, no attempt should be made to obtain confession as to the undisclosed income Hon ble Supreme Court in following binding decisions has held that beneficial circulars / instructions issued by the CBDT are binding upon the Income Tax Authorities and additions extracted by such uncorroborated and irregular surrenders during the course of survey are unsustainable being in .....

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Taxes may also be taken into consideration for the purpose of construction of the statute. 2. 259 ITR 51 Kerala State Industrial Dev. Corpn. Ltd. Vs. CIT (SC) Interpretation of taxing statutes - Finance Minister s speech before Parliament while introducing bill - Can be relied on to throw light on object and purpose of provisions. 3. 273 ITR 305 CIT Vs. Durgesh Oil Mills (All.) Circular - CBDT - Circular binding on Income Tax Authorities. It is well settled that the circular issued by the Centra .....

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atement incorrect and that discrepancy reconciled as It was a mistake-statement made under section 133A not conclusive proof- Assessee able to explain discrepancy in stock by production of relevant record - Addition to be deleted-Income-tax Act, 1961, s. 133A. 5.1 Apropos revenue ground no. 2 ld. AO made an addition of ₹ 3,45,000/- on account of entries found noted in the impounded material marked as A-14, during the course of survey has enquired about the contents thereof; there is no whi .....

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8377; 3,45,000/-. 5.2 Ld. counsel vehemently contends that once as a result of survey consolidated additional income was declared and suo motu increased by assessee as mentioned above there is no justification to accept that as well as go on adding further income which amounts to taxing same income twice. Ld. Counsel referred to the letter filed before the Ld. AO on 22.09.2008 placed at PB-17 wherein it was clearly stated that all the entries found noted in the pages found and impounded during t .....

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On perusal of these entries it is seen that they appear to be interest because the date has been mentioned regularly for a two month period for the same amount. For example 400 / D. Modi 25.9 to 2.11. Then 400 / Rajendra 01.11.07 to 2.1.08. Thus, it appear that these are entered for interest payment received. Moreover, on perusal of page 1 of annexure 24 it is seen that Shri Rajendra Ji Was debtor who has squared up his account with the assessee as on 01.04.2008. 6.5 Since, the cash balance of t .....

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puted on the basis of a document prepared at the end of the previous year relevant to assessment year under appeal and the loose paper under reference contained the entries prior to the end of the previous year, thus the same stood covered in the memoranda state of affairs as at 31.03.2008 and any further addition is not warranted. It is therefore, contended by ld. counsel that the Ld. CIT(A) has rightly deleted the addition and thus the order of Ld. CIT(A) deserves to be uphold on this score. 6 .....

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rthermore depreciation is a statutory deduction hence the same cannot be disallowed. Reliance is placed on the following case law:- (1) S.A. Builders Ltd. Vs. CIT 158 Taxman 74 (SC) (2) 35 TW 64 ITO VS. M/S TRIVENI FARMA (JAIPUR) (3) 92 TTJ 1060 MUKESH K. SHAH VS. ITO (MUMBAI) 6.2 Ld. DR supported the orders of AO. 6.3 We have heard the rival contentions and perused the material available on record. Apropos the first revenue ground from the record, it emerges that there are sufficient reasons to .....

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61/- as additional income, no dispute on this amount was raised by survey party. Thereafter, assessee before any further detection by department and before assessment proceedings, suo motu and without any insistence by the department, further increased the surrender of undisclosed income at ₹ 9,38,50,009/- for all impugned transactions. Thus assessee demonstrated that he want to come clean in this behalf. Department has accepted this additional income declaration, there is no dispute on th .....

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y of circumstances and fact that the assessee enhanced his surrender from ₹ 3,50,42,961/- to ₹ 9,38,50,009/-; the fact that the balance sheet reflects the sum total of his transactions as on 01.04.2008, it is not justifiable to add the totals of both the balance sheets. On verification of both the balance sheets it emerge that the one filed for income tax purposes is part of and incorporated in the one found during the course of survey. Therefore, in our considered view, the addition .....

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/ D. Modi 25.9 to 2.11. Then 400 / Rajendra 01.11.07 to 2.1.08; perusal of page 1 of annexure 24 it is seen that Shri Rajendra Ji Was debtor who has squared up his account with the assessee as on 01.04.2008. Ld. DR could not dispel such factual findings. Further it is found that assesee s cash balance as per balance sheet is ₹ 18,20,852/- and this amount being the interest income of the assessee during the year has been included in this cash balance on the basis of which the surrender has .....

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of ld. CIT(A) deleting the disallowance of ₹ 31,065/-. This ground of revenue is also dismissed. 9.1 Apropos assessee s appeal ld. Counsel for the assessee contends that during the course of survey statements of the assessee, his son Shri Narain Lal Agarwal (NLA) and employees were recorded. Surrender of undisclosed income towards investment and expenditure was obtained. The relevant extract of the statements of assessee s son NLA is as under: प्रश्न 36& .....

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#2344;ियम की धारा 133A(3)(ia) के तहत् impound कर लिया गया है जिसमें वित्तीय वर्ष 2007-08 व 2008-09 से संबंधित कागजात हैं, ज .....

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उक्त सभी loose papers व नोट बुक आदि को देख लिया है इनमें से बहुत से कागजों का अभी स्पष्टीकरण नहीं द .....

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1;स पेटे में वित्तिय वर्ष 2007-08 रू. 8,00,000/- की अतिरिक्त आय, आयकर के लिए मैं. अग्रवाल एंड कम्पनी में स .....

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306; जमीन की खरीद में किए गए अघोषित निवेश 32,43,730/- रू. व मकान निर्माण में किए गए अघोषित निर्माण के &# .....

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50;ानुसार आयकर अदा करने के लिए समर्पित करता हूँ। इसी प्रकार वित्तिय वर्ष 2008-09 में मैं. अग्र .....

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2335;े रू. 29,00,000/- मकान के निर्माण में किए गए अघोषित निवेश के पेटे रू. 14,43,714. व अशोक अग्रवाल को अघोषित आ .....

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के लिए समर्पित किए है। अर्थात् मैं. अग्रवाल एंड कम्पनी में वित्तिय वर्ष 2008-09 के लिए कुल रू .....

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6;ं. अग्रवाल एंड कम्पनी मे कुल रू. 75,22,019/- अघोषित आय मानते हुए नियमानुसार आकर के लिए समर्पित कर .....

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क्ष जो मेरे पिता हैं कि सहमति से दिए हैं इसके पेटे मैं श्री बंशीधर अग्रवाल द्वारा मैं. æ .....

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2340;िय वर्ष 2007-08 के लिए) आपको दिए जा रहे हैं। मैं यह विश्वास दिलाना चाहता हूँ कि मैं अपना व मेरí .....

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;सार अग्रिम कर एवं स्वतः कर निर्धारित कर दे दूंगा चूंकि मैं. अग्रवाल एंड कम्पनी का कामक .....

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made by assessee therein. It is settled law that the statement which is relied on by the department itself cannot be distorted to in parts to suit the revenues cause. During survey qua some loose papers including page 5 of Exhibit A-14 assessee son, in reply to question No. 18 of the statement categorically stated that these entries related to the purchases of plot of land in his own name for a total consideration of ₹ 45,40,200/-. Similarly in reply to question No. 23 he further admitted .....

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er: The fact that this purchase of plot was made out of funds available outside the books of assessee and is not reflected in the surrendered income as per the revised return of the assessee, the same is added to the income of the assessee. Ld. AO conveniently lost sight of the fact that impugned investment was owned by son by a sworn statement which for all purposes remains uncontroverted on the record. This material and clinching fact cannot be ignored or brushed aside. If son has admitted the .....

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so offered additional income of ₹ 40,00,000/- in respect of assessment year 2009-10 while filing the return of income for A.Y. 2009-10 which is not backed by any evidence; the same was offered bona fide to by peace and to cooperate with the department, it has been duly accepted by the department in the assessment completed u/s 143(3) of the I.T. Act,1961 for the assessment year 2009-10 and such additional income offered is sufficient to cover the alleged investment in purchases of property .....

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stment in the impugned property was made by the son NLA a fact which is uncontroverted and clinches the issue in favour of the assessee. There is no material to suggest that investment in this behalf was made by assesssee. During survey proceedings in respect of loose papers including page 5 of Exhibit A-14 assessee son, in reply to question No. 18 of the statement categorically stated that these entries related to the purchases of plot of land in his own name for a total consideration of ₹ .....

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