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TMI Blog2016 (10) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the course of survey, Shri Kanwal Aggarwal, Director of the company was shown the list of secured redeemable non convertible debentures and he was asked to provide evidence of genuineness of these debentures and full details concerning these transactions. Shri Kanwal Aggarwal replied that he is unable to provide necessary evidence regarding genuineness of debentures subscribed by certain parties. Thereafter, he was asked to identify the parties in respect of whom he is unable to explain the genuineness, in response to which, Shri Kanwal Aggarwal surrendered the sum of Rs. 2,85,18,000/-. Another list was shown to Shri Kanwal Aggarwal and he also surrendered the sum of Rs. 24,66,715/- in respect of unsecured loan in the said list. He further surrendered the sum of Rs. 40,15,285/- as additional income. Thus, the total income of Rs. 3,50,00,000/- (Rs. 2,85,18,000 + 24,66,715 + 40,15,285) was surrendered by him. The assessee retracted the surrender made by him vide letter dated 7th September, 2010 which was submitted on 8th September, 2010. Soon thereafter, the assessee filed the return of income on 13th October, 2010 in which the income surrendered during the course of survey was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antly during the course of recording of the statement. Therefore, the director of the assessee company stated that he is unable to explain the genuineness of credit of all the persons immediately and then he was forced to make the surrender. Therefore, the surrender was retracted by filing of letter as well as by not offering the income in the return of income. He further stated that Hon'ble Jurisdictional High Court in the case of CIT Vs. Dhingra Metal Works - [2010] 328 ITR 324 (Delhi) stated that the statement recorded u/s 133A is not conclusive and the addition cannot be based upon the statement. Similar view was expressed by Hon'ble Madras High Court in the case of CIT Vs. S. Khader Khan Son [2008] 300 ITR 157 (Madras). The decision of Hon'ble Madras High Court is approved by Hon'ble Apex Court in [2012] 254 CTR 228 (SC). He further submitted that during the course of assessment proceedings, the assessee produced all the evidences in support of the genuineness of credit. The evidences produced by the assessee were more than 7,000 pages. The Assessing Officer, though acknowledged the production of evidences, but simply rejected by mentioning that "I do not find any force in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as hardly any justification to reject all of them without dealing with any of them. Totality of these facts clearly shows that the Assessing Officer made the addition because the surrender was made by the assessee during the course of survey. With this, we come to the legal position whether the addition can be based solely on the surrender made during the course of survey. We find that Hon'ble Jurisdictional High Court has considered this issue in the case of Dhingra Metal Works (supra) wherein Hon'ble Jurisdictional High Court, upholding the decision of ITAT, held as under:- "Held, dismissing the appeal, that for a statement to have evidentiary value, the survey officer should have been authorised to administer an oath and to record a sworn statement. While section 132(4) of the Act specifically authorizes an officer to examine a person on oath, section 133A did not permit the same. Moreover, the word "may" used in section 133A(3)(iii) of the Act clarifies beyond doubt that the material collected and the statement recorded during the survey was not a conclusive piece of evidence by itself. It was settled law that though an admission was an extremely important piece of ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, Assessing Officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders." 10. Thus, even as per CBDT, the addition should be based upon the evidences/material gathered during the course of search/survey rather on the basis of statement recorded during the course of survey. Admittedly, in this case, no material was collected during the course of survey which could establish that the credit was non-genuine. Learned CIT(A) has recorded the finding that the assessee has taken the small credits of below Rs. 20,000/- from various persons. However, as per KYC documents prescribed by the RBI, PAN card or ration card or voter ID etc. were obtained in respect of each and every depositor and the same were furnished before the Assessing Officer. The assessee has also produced the copy of debenture application form as well as debenture allotment letter. Debenture trust deed was executed by the company with the debenture trustee to secure and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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