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The ACIT, Surat Versus M/s. Parshwa Enterprises

Addition based on mere survey statement - non availability of incriminating document found - Held that:- not a single incriminating document or evidence or loose sheet has been found. We put a specific query to the learned departmental representative to place on record any evidence or material other than statements of assessee’s partners supportive of the impugned addition. He replied in negative. We are of the opinion in these peculiar facts and circumstances that the impugned addition based on .....

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made by the Assessing Officer in assessment order dated 21-12-2010 as based on assessee s partners statements made during survey, in proceedings under section 143(3) of the Income Tax Act, 1961; in short the Act . 2. The assessee-firm is in building and construction business. The department carried out a survey in its case on 30-01-2008 at its site/premises. It recorded statements of assessee s partners s/sh Manish K. Kapadia and Bhavesh Patel disclosing unaccounted income in question of ₹ .....

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tement in question did not have any evidentiary value. The Assessing Officer in assessment order rejected the same. He observed that assessee s partners statements have been made without any distress or coercion, no retraction had been communicated to department authorities, its partners had exclusive knowledge about its unaccounted income and there was no material on record to establish that their statements were not correct as per its financial affairs on the said date. He accordingly added th .....

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etracted the statement (in part) regarding disclosure of income in the survey proceedings but also explained why the retraction was justified. During the survey proceedings, an estimate of expenditure towards development and construction of the project was made at ₹ 4.20 crores and disclosure of ₹ 2,35,27,525/- was worked out taking into account the construction expenses incurred till the date of survey during financial year 2007-08 (A.Y. 2008-09) only. While making the retraction of .....

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not voluntarily made. It is seen from the statement question /answer No.26 that neither the question nor the answer given by the partner Shri Manish Kirtilal Kapadia states that expenditure of ₹ 4.20 crores estimated on development and construction was relating to the current year only and not to the project as a whole. On the contrary the words used are "till this date" which would normally signify the project as a whole. There is no base even for expenditure of ₹ 4.20 cro .....

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vey. 4.1. It has been held in certain decisions that statement recorded u/s. 131 has no evidentiary value as it is recorded in absence of witnesses. In other judgments, it is held that statements have evidentiary value but is not conclusive evidence and in the event of retraction of any admission, the statement can be used only if corroborated by other evidences. No cogent evidence has been shown to exist which would establish the existence of unexplained investment by the appellant other than t .....

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so when it has been retracted and justifiable reasons for retraction are offered. The decision of the Jurisdictional High Court and the Tribunal in the case of Ratan Corporation, Nirmal Textiles, Pramukh Builders, Kailashben Manharlal Choksi and Ashok Manilal Thakkar all support the case of the appellant that no addition to income can be made only on the basis of disclosure in statement without there being any evidence/material found to prove its existence. Board's instructions dated 10th Ma .....

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