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Deputy Commissioner of Income Tax, Circle-2 (1) , New Delhi Versus M/s Bansal Credits Limited

2016 (10) TMI 58 - ITAT DELHI

Addition on account of additional income declared in the course of survey u/s 133A on oath - addition on unexplained credit - Held that:- Assessing Officer, without discussing the case of a single creditor, rejected all of them. Learned CIT(A) has discussed all those documents from page 5 to 17 of his order. The Assessing Officer made the addition of ₹ 3,50,00,000/- as unexplained credit u/s 68 when admittedly, the sum of ₹ 3,50,00,000/- was the surrender made by the assessee during .....

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ime of search. We have already discussed that in view of the decision of Hon'ble Jurisdictional High Court in the case of Dhingra Metal Works (2010 (10) TMI 29 - DELHI HIGH COURT ) and of Hon’ble Apex Court in the case of S. Khader Khan Son (2013 (6) TMI 305 - SUPREME COURT ) as well the Circular of CBDT vide letter F.No.286/2/2003-IT(Inv.II) dated 10th March, 2003, the addition cannot be made only on the basis of surrender made at the time of survey. - Decided in favour of assessee - ITA No. 39 .....

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ount of additional income of ₹ 3,50,00,000/- declared in the course of survey u/s 133A on oath. 3. The facts of the case are that the assessee company is engaged in the business of financing of automobiles and allied through loan cum hypothecation mode. The company raised funds through secured redeemable non-convertible debentures and fixed deposits from its investors. There was survey u/s 133A of the Income-tax Act, 1961 at the assessee s business premises on 5th November, 2009. During th .....

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eness, in response to which, Shri Kanwal Aggarwal surrendered the sum of ₹ 2,85,18,000/-. Another list was shown to Shri Kanwal Aggarwal and he also surrendered the sum of ₹ 24,66,715/- in respect of unsecured loan in the said list. He further surrendered the sum of ₹ 40,15,285/- as additional income. Thus, the total income of ₹ 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 date .....

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. The Assessing Officer asked the assessee to produce some of the debenture holders and depositors. However, the assessee could not produce any of them. In view of the above, the Assessing Officer made the addition of ₹ 3,50,00,000/- as unexplained credit u/s 68. On appeal, learned CIT(A) noticed that out of the credit in the assessee s books of account, the credit to the extent of ₹ 1,28,39,715/- was not relevant to the assessment year under consideration. He also noticed that the a .....

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grieved with the order of the CIT(A), is in appeal before us. 4. At the time of hearing before us, it is submitted by the learned DR that the date of survey was 5th November, 2009 while the retraction is made by the assessee on 7th September, 2010 which was almost more than 10 months from the date of survey. That such a long gap itself proves that the retraction was an after-thought and should not be given undue weightage. He stated that the assessee made a voluntary surrender of the income duri .....

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of recording of the statement. It is impossible to explain by anybody the genuineness of credit of 3,000 persons instantly 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 .....

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urse 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 them . He stated that the Assessing Officer made the addition of ₹ 3,50,00,000/- for unexplained credit u/s 68. That obviously as per statement also, the sum of ₹ 40,15,2 .....

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ing Officer should rely upon the evidences gathered during the course of search/survey operation and then only, the relevant assessment should be framed. He, therefore, submitted that the order of learned CIT(A) should be sustained. 6. We have carefully considered the submissions of both the sides and have perused the material placed before us. Though the Assessing Officer has made the addition of ₹ 3,50,00,000/- as unexplained credit u/s 68, apparently, he has made the addition because of .....

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From the above, it is evident that obviously, the surrender of ₹ 40,15,285/- was not in respect of cash credit and, therefore, the same could not have been added u/s 68. Moreover, learned CIT(A) has recorded the finding that credit to the extent of ₹ 1,28,39,715/- was not pertaining to the year under consideration and, therefore, the same could not have been added u/s 68. The Assessing Officer has recorded that the assessee has furnished various letters explaining the genuineness of .....

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r 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) .....

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mission to show that it was incorrect. Since the assessee had been able to explain the discrepancy in the stock found during the course of survey by production of relevant record including the excise register of its associate company, the Assessing Officer could not have made the addition solely on the basis of the statement made on behalf of the assessee during the course of survey. 8. The ratio of the above decision would be squarely applicable to the facts under appeal because in the case und .....

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ection 133A shall not have any evidentiary value. It could not be said solely on the basis of the statement given by one of the partners of the assessee-firm that the disclosed income was assessable as lawful income of the assessee. 9. That the above decision of Hon ble Madras High Court has been approved by Hon ble Apex Court in [2012] 254 CTR 228 (SC). That CBDT also in its letter F.No.286/2/2003-IT(Inv.II) dated 10th March, 2003 provided as under :- Instances have come to the notice of the Bo .....

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on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Departments. Similarly, while recording statement during the course of search, seizures 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 pending assessment proceedings also, Assessing Officers should rely upon the evidences .....

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that the assessee has taken the small credits of below ₹ 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 p .....

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d deposit amounts is duly established and it can be said that the assessee has discharged its primary burden under the law . After considering the facts and arguments of both the sides, we do not find any infirmity in the above finding of learned CIT(A). There was a credit in the assessee s books of account of small amounts of below ₹ 20,000/- each from more than 3,000 persons. The assessee has furnished necessary evidences in respect of those creditors, which was more than 7,000 pages. Th .....

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