TMI Blog2018 (1) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellate order. In the instant case, if we eschew the said retracted forced confession from record, then we are afraid there are no incriminating material on record to justify additions as was made by the AO which learned CIT(A) has rightly appreciated in deleting the additions vide his appellate orders. The Revenue in the instant case has not even bothered to cross examine the partner of the assessee post retraction of his statement. The retraction has been made by the assessee within 10 days of the aforesaid alleged forced statement and writ petition has also been filed with Hon‟ble Bombay High Court. There are several letters written by the assessee to various authorities within Income Tax Department including CBDT alleging that the statement was obtained forcibly by survey team . These correspondences/writ petition sans absence of cogent incriminating material on record to prejudice the assessee speak loudly and points to one and only one irresistible conclusion that Revenue has obtained forced confession from the assessee to surrender income of ₹ 1.20 crores and we have no hesitation in confirming the well reasoned order of the Ld. CIT-A which we affim/sustain. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. The survey action u/s. 133A was carried out by Revenue on 19.09.2008 and during the course of survey operations, certain loose documents were found and impounded by Revenue. Statement of assessee‟s firm partner Shri. Inderjit Singh Khokhar was recorded by Revenue during the course of survey operations u/s 133A in which he disclosed and made surrender of an income of ₹ 1.20 crores, as per details below. Sr . No Points on which disclosure was made . Amount . of . disc l osure .(Rs.) 1. Cash receipts 62,00;000 2. On account of purchases ~ .: :20,00,000 3. On account of labour charges 8,00,000 4. On account of site expenses 3,67,000 5. On account of octroi transportation 1,10,000 6. On account of wages salaries 12,77,000 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e discrepancies in the books of accounts such as non entry of one bill impounded during survey in books of accounts and some other discrepancies in the bills etc. . The A.O rejected the contentions of the assessee and made the addition of ₹ 1.20 crores mainly relying upon page no. 175 which was loose paper impounded during the course of survey operations u/s 133A, which is placed in paper book at page no. 155, on the ground that the assessee has voluntarily surrendered and disclosed income of ₹ 62.00 lacs based on this loose paper vide statement recorded of partner Sh. Inderjit Singh Khokhar . The perusal of page 175 of the impounded material during survey operations u/s 133A which is a loose paper reveals that it has notings as under: Seven K-05/4 Five K-01/5 Eleven-K-5/6 Two K-18/06 Twelve K-15/7 Ten K-12/08 Fifteen K-17/08 The partner of the firm Mr Inderjit Singh Khokhar stated while replying to question no 11 in his statement recorded during the course of survey operations decoded the word K‟ for lakhs and it was stated that these amounts were received on various dates and it is difficult to recollect the sourc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade the following additions on account of additional income declared by the appellant during the course of survey u/s. 133A at their premises on 19/09/2008. The heads under which the disclosure was made are as under:- Amount of disclosure (Rs ) 1 Cash receipts 62,00,000 2 .On account of purchases 20,00,000 3 On account of labour charqes 8,00,000 4 On account of site expenses 3,67,000 5 On-account of octroi transportation 1,10,000 6 On account of waqes salaries 12,77,000 7 On account of travelling conveyance 46,000. 8 On account of capital introduced by partners 2,00,000. Total disclosure 1,20,00,000 26. From the peru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een given voluntarily and therefore the statement may be treated as retracted as the disclosure of additional income of ₹ 1,20,00,000/- was taken through intimidation and threats given during the survey. As we have already requested not to deposit the four post dated cheque of ₹ 10,00,000/- each taken forcibly from us, we may state that there was no concealed income, which was found during the course of survey and once again request not to deposit the cheque. 32. It is clear from the above retraction letter filed before the AO that the appellant has leveled not only the serious allegation of threat and coercion but also another serious allegation, that the statement was written and prepared by the ACIT Circle 18(1) and the partner of the firm was not allowed to read the contents of the same and was forced, to sign the statement. The AO should have taken such allegations leveled seriously and cross examined the appellant for the allegations leveled. Once the retraction statement was made by the appellant alleging the threat and coercion along with the allegation of forcefully getting the statement signed from the partner of the firm, the AO was to examine th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he admission to show that it is incorrect. 37. Statement of the surveyed party recorded during the course of survey proceedings under section 133A has no evidentiary value. 38. In the case of COMMISSIONER' OF INCOME TAX vs. S. KHADERKHAN SON (2008) 214 ITR (Mad) 589 :(2008) 300 ITR 157 (Mad), it has been held that Sec. 133A does not empower any IT authority to examine any person on oath, hence, any such statement has no evidentiary value and any admission made during such statement cannot, by itself, be made the basis for addition, 39. In the case of INCOME TAX OFFICER vs. VIJAY KUMAR KESAR, (2010) 231 ITR (Chattisgarh) 165 : (2010) 327 ITR 497 : (2010) 36 DTR 13, recently the Hon ble High Court has held that Addition on the basis of statement recorded during survey-Assessee surrendered the cash and value of excess stock found during survey for taxation but did not offer any such amount in his return-He produced his updated books of account and other primary records during the assessment proceedings to explain the cash and stock found at the time of survey but the AO rejected the same solely on the ground that the assessee had made confessional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents. But no efforts were made in this direction and the AO proceeded to make the additions on the basis of the admission of additional income in the statement recorded during the course of survey u/s 133A. 41 The addition made merely on the basis of statement recorded during the course, of survey, without any further corroborative evidence, cannot be held to be justified. The additions cannot further be sustained in view of the allegation that the disclosure of additional income under the various heads was taken forcefully and the partner of the firm Shri. Inderjit Singh Khokhar was forced to sign the statement without disclosing its content to him. Such categorical assertion made by the appellant appears to be correct looking into the fact that the appellant had brought the facts of the survey proceedings and incidents of their harassment to the knowledge of the higher authorities of the department including Central Board of Directs Taxes and had also filed the writ petition before the High Court of Bombay narrating the events and, irregularities committed by the authorized officer during the course of survey. The AO has not rebutted the above arguments of the appellant in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t an Assessing Officer should rely solely upon the evidences and materials gathered during the survey for making additions and framing the assessment orders and the statements or confession taken during the survey do not serve any useful purpose. 44, In view of the facts and' circumstances explained above, in my considered opinion, there is no justification for making addition of ₹ 62,00,000/- to the income of the appellant on account of cash receipts as there is no credible evidences placed on record to prove the same. As far as the paper placed at page 175 of the impounded material is concerned, it is a plain paper or a dumb document, showing some words not even figures written on it, without any corroborative evidence to show that these represent the money received in cash by the appellant. There is no further evidence regarding the names and addresses of the parties who have paid such amounts in cash and what is the nature of these transactions. In the absence of any such corroborative evidence placed on record by the AO, the addition made amounting to ₹ 62,00,000/- cannot be sustained and hence deleted. 45. The AO has made further additions to the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Q. 18 00 you want to say anything else? Ans: Yes, Whatever stated above is true and correct to the best of my knowledge. We have declared a sum of ₹ 62,00,000/- (Rupees sixty two lakhs only) on account of cash receipts, ₹ 46,00,000/- (Rupees forty six lakhs) on account of unproved vouchers/expense, ₹ 12,00,000 (Rupees Twelve lakhs) on a/c of capital introduced by the partners during the period 01/04/2008 to 31/08/2008 totalling to ₹ 1,20,00,000/- (Rupees One crore Twenty lakhs only) over and above our regular income to buy peace of mind and to avoid any penal action. We anticipated that no penal action will be imposed/initiated upon us taking cognizance of above declaration Further, we the partners of the M/s. Oriental Decorators confirmed that the above statement is given by us without any threat, coercion or undue influence on us. 47. It is clear from the above answers to the questions that the above additions have been made by the AO solely based on the statement recorded during the course of survey proceedings u/s 133A. There is no mention of any documentary evidence or any impounded documents in the above statement which could, hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 58,00,000/- to the income of the appellant on account of unaccounted purchases, labour charges, site expenses, salary, wages, octroi/transportation, conveyance and capital introduction by the partners, as there is no credible evidence, placed on record to prove the appellant had incurred the above expenses and not recorded in the books of accounts, These additions have been made purely on the basis of statement recorded during the course of survey u/s 133A which was later on retracted. In the absence of any other corroborative evidence placed on record by the AO to support the additions made, such addition made cannot be sustained and hence additions made amounting to ₹ 58,00,000/- is hereby deleted. 50. Regarding the instances of additions made in the case of the appellant for the AY 2007-08 and 2008-09 quoted by the AO in the assessment order, there is no relevance of quoting these instances for the year under consideration as every assessment year is separate assessment year and the principle of res judicata does not apply to the income tax proceedings. The additions made in those years will have no material effect on the proceedings for the year under co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been added back to the income of the assessee. the only explanation offered by the appellant is that these bills were not accounted for due to oversight. Such an explanation cannot be accepted. The AO is directed to add back the above amounts of ₹ 88,004/- and ₹ 27,000/- as unaccounted expenditure u/s. 69C of the I.T Act 1961. 55. Regarding the other discrepancy of two bills of M/s Weather Cool Sales, of ₹ 61,03,450/- and ₹ 21,19,636/- were recorded in the final accounts as ₹ 60,40,584/- and ₹ 20,97,804/- respectively, the AR of the appellant has contended that this difference in the amounts is on account of Tax Deducted at Source. The AR of the appellant has also filed the copy of the Ledger account of the above party (placed at annexure S of the paper book) wherein it is clear that though the amount of the bill is ₹ 61,03,450/- after deducting TDS of ₹ 62,866/-, the net amount credited to the account of the above party is ₹ 60,40,584/-. Similar is the case in respect of the amount of ₹ 21,19,636/-, out of which TDS of ₹ 21,832/- has been deducted and net amount credited to the account of the above party ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income to the tune of ₹ 1.20 crore from the partners of the assessee. It was submitted that inspection of the computer was done on 06-10-2008 by P system which showed last updation of data base entry on 20-09-2008 and alterations were carried out in the midnight of 19/20-09-2008. Our attention was also drawn to page no. 83 to 84 and 86 to show that the files of tally were manipulated and modified during the course of survey operation at the mid-night of 19/20-09-2008 to suit the forced confession from the partner of the assessee. It was submitted that survey started on 19.09.2008 and ended on 20.09.2008 and letter was written by the assessee on 29.09.2008 retracting the said surrender of income through an advocate. It was also submitted that retraction letter dated 16-10-2008 was given before the tax authorities retracting from the surrender of the income to the tune of ₹ 1.20 crore. It was submitted that the writ petition was filed by the assessee with Hon‟ble Bombay High Court on 05-12-2008 which was later withdrawn on 06-01-2009 on the assurance of CBDT that the grievance of the assessee will be looked into. It was submitted that there was forced confession ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. On account of purchases ~ .: :20,OO,OOO 3. On account of labour charges 8,00,000 4. On account of site expenses 3,67,000 5. On account of octroi transportation 1,10,000 6. On account of wages salaries 12,77,000 7. On account of travelling conveyance 46,000 8, On account of capital introduced partners by 12,00,000 Total disclosure 1,20,00,000 . The assessee filed return of income on 30.09.2009 declaring total loss of ₹ 44,18,980/- . The assessee,however, did not included income of ₹ 1.20 crores which was on account of disclosure of concealed income made during the course of survey operations conducted by Revenue u/s 133A on 19-09-2008, in the aforesaid return of income filed with the Revenue. The assessee immediately ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee at the behest of the survey team wherein books of accounts were manipulated/tampered with and the partner of the assessee was coerced/threatened by survey team to give forced statement to voluntarily disclose an concealed income of ₹ 58 lacs based on such tampering of books of accounts . Hence, in all alleged concealed income of ₹ 1.20 crore was forced by survey team to be surrendered by the assessee‟s partner Sh Inderjit Singh Khokhar on behalf of assessee as its concealed income for the previous year relevant to the impugned assessment year The assessee vide letter dated 16-10-2008 also retraced from the statement of its partner recorded on 19-09-2008 during the course of survey action u/s 133A. It is also been explained that there was no discrepancy in the books of accounts although some of the bills were not entered in the books of accounts when survey took place and so far as discrepancies in the books of accounts and bills are concerned, same were explained to be on account of differential due to VAT/TDS. The assessee has also explained that preceding years additions as made by Revenue stood deleted at appellate forums . All these contentions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions of the assessee. These documents were also placed by the assessee before Hon‟ble Bombay High Court in the writ petition filed with Hon‟ble Bombay High Court. The dismissal of the said writ petition no. 2831 of 2008 vide orders dated 06.01.2009 permitting withdrawal of the writ petition by Hon‟ble Bombay High Court is placed in paper book at page no. 106, wherein Hon‟ble Bombay High court permitted assessee to raise all grievances relating to entries in books of accounts before the authorities during the course of assessment proceedings. CBDT vide letter dated 03-11-2008 has also written letter to the assessee assuring suitable action to resolve grievance of the assessee which is placed on record in paper book. The assessee filed its return of income on 30-09-2009 wherein the said surrendered income of ₹ 1.2 crore was not declared as income in the return of income filed with revenue consequent to the survey u/s. 133A. Thus, in nutshell the assessee made the retraction of the said surrendered income of ₹ 1.20 crore vide letters dated 29.09.2008, 16.10.2008, filing of writ petition with Hon‟ble Bombay High Court and several other communi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been entered in the books of accounts which has been suitably explained by the assessee that these minor variations were on account of VAT/TDS differentials which stood reconciled by the assessee as also it is explained that merely because one bill is not entered in the books of accounts on the day of survey is not sufficient to reject books of accounts and come to adverse conclusions. These minor discrepancies in the absence of other tangible incriminating material against the assessee in our considered view does not warrant any addition as was made by the A.O. . The AO has referred to additions being made in the preceding years which the assessee has explained to be deleted by appellate authorities which has also remained un-rebutted by Revenue even before us and in any case merely because additions on some grounds in preceding years have been made does not warrant that the books of accounts have become unreliable for even the subsequent years as principles of res judicata are not applicable to income-tax proceedings as additions in every year is to be made on its own merits. There were additions made to the tune of ₹ 58 lacs on account of alleged discrepancies in the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax authorities including CBDT, Hon‟ble Bombay High Court as well before us as to the statement being obtained by threat, force and coercion but Revenue has chosen not to counter these allegations with concrete and material evidences rather a bald statements of denial has been made by Revenue which is not sufficient enough to fasten tax liability in the instant case keeping in view nature of serious allegation raised by the assessee and the entire factual matrix surrounding the case. The assessee has retracted the said statement within few days of the making of the said statement on 19-09-2008 during course of survey proceedings vide advocates letter dated 29-09-2008 as well retraction letter dated 16-10-2008 filed by the assessee. The Ld. CIT-A has rightly appreciated the stand of the assessee in deleting the additions as the revenue has no cogent incriminating materiel with it to justify the addition of ₹ 1.2 crores apart from the forced confessional statement which is involuntary in nature. The loose document impounded being page no 175 during survey operations is held by us to be dumb document which is alleged by the assessee to have been prepared at the time of surv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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