TMI Blog2018 (5) TMI 1629X X X X Extracts X X X X X X X X Extracts X X X X ..... deleted - Decided in favour of assessee. - I.T.A. No. 303/Ind/2017 - - - Dated:- 18-5-2018 - Shri Kul Bharat, Judicial Member And Shri Manish Borad, Accountant Member Appellant by : Shri Anil Kamal Garg C. A. and Shri Arpit Gaur, CAs Respondent by : Shri K. G. Goyal, Sr. DR ORDER Per Kul Bharat, J. M. Appeal by the assessee is directed against the order of CIT(A), Ujjain, dated 6th February, 2017, pertaining to the assessment year 2005-06. 2. The assessee has raised the following grounds of appeal :- 1. That, the learned CIT(A) grossly erred, both on facts and in law, in confirming the addition of ₹ 77,845/- made by the AO in the appellant's income on allegation of unexplained cash, solely on the basis of statement of the appellant recorded during the course of survey u/s. 133A of the Act, without considering and appreciating the explanation with evidences offered by the appellant. 2. That, the learned CIT(A) grossly erred, both on facts and in law, in confirming the addition of ₹ 54,220/- made by the AO in the appellant's income on allegation of unexplained investment in stock, solely on the basis of statement of the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmed. Now the assessee is in appeal before this Tribunal. 4. Apropos ground nos. 1 to 6, the Ld. Counsel for the assessee reiterated the submissions made before the CIT(A). For the sake of clarity, the submissions made before the CIT(A) is reproduced as under :- The appellant is an individual, aged nearly 35 years, residing in a tribal village 'Jobat' Dist. Jhabua. The appellant started his earning career by becoming a collection agent of Sahara India limited in the year 1993-94. He carried on such activity up till F.Y. 1996- 97. Thereafter he started the business of brokerage in kirana, cotton and grain at Jobat and surrounding places. In November 2001, he started a retail kirana shop at Jobat under the name and style of M/s. Shriram Traders by making small investment of approx. ₹ 70,000/-. The appellant had accumulated capital of ₹ 3,22,800/- up till 31-03-2003. The appellant had disclosed all such facts in his Return of Income filed for the first time in respect of A.Y. 2004-05 on 05-10-2005. Along with such Return of Income for A.Y. 2004-05, the appellant had also furnished his statement of affairs as of 31-03-2004 as also a statement showing accum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compliance of all such Notices from time to time by making the written submission and also by producing relevant evidences in support of his written submissions. A copy of such written submissions are being furnished herewith. Finally, on 18-12-2007, the learned Assessing Officer framed the assessment under section 143(3) of the Income-Tax Act, 1961 by determining the Total Income at ₹ 10,50,590/- as against the Returned Income of ₹ 82,500/- thereby making addition of ₹ 9,68,285/- on the following grounds: S. No. Particulars Amount in Rs. 1 Alleged unexplained cash 77,845 2 Alleged unaccounted investment in stock 54,220 3 Addition on account of alleged suppressed sales 96,251 4 Addition on account of GP on alleged suppressed sales 5,066 5 Addition on account of Annexure A/1 to A/19 impounded during the course of survey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n his books of account. The innocent appellant, being a villager residing in a tribal area, came forward to accept the entire amount of cash found as his undisclosed income for the relevant previous year. 2.06 That, during the course of assessment proceedings, the appellant, vide his counsel's letter dated 10-12- 2007, had explained the source of cash of ₹ 77,845/- found during the course of survey. The appellant had explained that the sources of the cash were from (i) sale proceeds of his retail shop, (ii) recovery of advances given by him earlier and (iii) withdrawals of cash of ₹ 50,000/- made by him from his Saving Bank Account bearing No.159/14 maintained with Jila Sahakari Kendriya Bank Maryadit, Jhabua on 10-11-2004. In order to corroborate transaction of cash withdrawal from Bank, the appellant had also furnished a copy of his Bank Statement for the relevant period. In the note appended to the Computation of Income also, the appellant had explained that he had set apart cash sum of ₹ 80,000/- on 18-11-2004 out of sales proceeds of his retail shop and cash withdrawal made from his savings bank account on 10-11-2004. The appellant had explain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Assessing Officer has also made a reference of the statement of affairs furnished by the appellant along with his Return of Income for A.Y. 2004-05 in para (9) of his Assessment Order. 2.09 Now as regard the action of the learned AO in placing absolute reliance on the statement recording during the course of survey by brushing aside genuine explanation and documentary evidences furnished by the appellant, at the outset, it is submitted that under the scheme of Law a statement on oath cannot be recorded during the course of proceedings under section 133A of the Act. It shall be appreciated by Your Honour that any statement on oath can be recorded only under sections 131 or 132(4) of the Income-Tax Act, 1961. It would thus follow that merely on the basis of a statement recorded during the course of survey no adverse inference can be drawn against an assessee without having any other cogent evidence. In the scheme of Law, statement on oath cannot be recorded under the provisions of section 133A of the Income-Tax Act, 1961 and any such statement recorded on oath has no evidentiary value. Their Lordships of High Court of Kerala in case of Paul Mathews Sons vs. CIT as reported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire reliance on the statement of the appellant, the learned Assessing Officer ought to have considered the explanation with documentary evidences adduced by the appellant. Since, in the instant case, the learned Assessing Officer has not brought on record any material or evidence to discard the explanation tendered by the appellant and therefore the entire addition so made by the learned AO deserves to be deleted. Reliance is also placed on judicial decisions of Ajit Chintaman Karve vs. Income-Tax Officer, ITAT Pune 'B' Bench, (2007) 112 TTJ (Pune) 480. 2.11 Your Honour, recently Hon'ble High Court of Madras in case of CIT vs. S. Khader Khan Son (2008) 300 ITR 157 (Mad) has also enunciated the principal that an admission made by person is not conclusive and the person making the admission is entitled to show that the admission was incorrect. It further went out to hold that whatever statement is recorded under section 133A of the IT Act it has no evidentiary value for the reason that the officer is authorized to administer oath and take any sworn statement which alone has evidentiary value as contemplated under law. 2.12 It is further submitted that even the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment proceedings. In this context, it is submitted as under: 3.01 That, during the course of survey, physical inventory of all the kirana and cosmetic goods found in the business premises of the appellant was taken by the survey party. A copy of such inventory is placed at Page No. 21 to 26 of the Paper Book. On a perusal of such inventory it shall be observed by Your Honour that total valuation of the inventory of various kirana and cosmetic items found in the business premises of the appellant was to the extent of a very meager sum of ₹ 54,220/- only. It shall further be observed by Your Honour that the appellant was having as many as 163 items in his kirana shop but the total valuation of the inventory worked out at ₹ 54,220/- only which speaks in volumes about the scale of business carried on by the appellant. 3.02 That, the learned Assessing Officer has not controvert the explanation and other documentary evidences furnished by the appellant to establish that he was carrying on his retail business since November'2001. 3.03 During the course of survey, the appellant vide reply to Q. No. 9 accepted the entire amount of investment in stock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er was not required to maintain any books of account under the provisions of section 44AA of the Act read with section 44AF. He ought to have considered that the gross turnover of the appellant for immediately preceding assessment year was to the extent of ₹ 8,36,000/- as shown by the appellant in his Return of Income for A.Y. 2004-05 and therefore maintenance of stock of meager value of ₹ 54,220/- cannot be said to be excessive, disproportionate or unexplained stock. In the line of the retail business, normally a businessman is required to maintain inventory for 2 months whereas in the case of the appellant it was not even equivalent to 1 month of his turnover. In view of the above facts and circumstances of the case, the addition so made by the learned AO at ₹ 54,220/- on account of unexplained investment in stock deserves to be deleted in to to. Ground No. 4(a) That, the learned assessing officer grossly erred in making the addition of ₹ 5066/- in the appellant's income by estimating the total sales of the appellant, for the year under consideration, at ₹ 10,11,317/- as against the same shown by the appellant at ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 ii) ACIT vs. Sun Link Traders Pvt. Ltd. (2006) 6 ITJ (Trib) 351 iii) C.V. Sunny vs. ACIT (2008) 7 DTR (Chennai)(Trib) 478 In view of the above facts and circumstances of the case, the addition so made by the learned Assessing Officer at ₹ 96,251/- deserves to be deleted in to to. Ground No. 5 That, the learned assessing officer grossly erred in making the addition of ₹ 5,53,501/- in the appellant's income without specifying any provision of the law under which such addition has been made. He grossly erred in making such addition merely on the basis of statement of the appellant recorded during the course of survey u/s. 133A of the Act, without considering the explanation with evidences offered by the appellant, during the course of assessment proceedings. In this context, it is submitted as under: 4.01 That, during the course of survey, certain books and loose papers were found from the business premises of the appellant and an inventory of such books and loose papers, comprising of 19 items, was duly prepared. A copy of such inventory is placed at Page No. 19 20 of the Paper Book. All such books and loose papers were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of such transactions was warranted. 4.06 That, on a perusal of the Assessment Order, it shall be appreciated by Your Honour that the learned Assessing Officer has not assigned any single reason for making the impugned addition of ₹ 5,53,501/- in the appellant's income except stating that during the course of statement of the appellant recorded on oath, the appellant had declared an additional income of ₹ 5,53,501/- on the basis of subject loose papers etc.. It shall be appreciated by Your Honour that the learned Assessing Officer had conducted independent verification of each and every loose paper and diary and he could not find any cogent basis for making the impugned addition. As has already been submitted by us in the preceding paras that a statement recorded on oath during the course of survey has no legal sanctity and it cannot become a sole basis for making any addition in income of an assessee, especially in a situation where the Assessing Officer could not corroborate the so called admission with the material on record. In view of the above facts and circumstances of the case, the addition so made by the learned Assessing Officer at ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement of affairs filed for A.Y. 2005-06. Since, the appellant himself had shown the investment in such debtors and had also explained the sources thereof, no separate addition on this count was warranted. In view of the above facts and circumstances of the case, the addition so made by the learned Assessing Officer at ₹ 32,484/- and ₹ 81,950/- respectively deserves to be deleted in toto. Ground No. 7 That, the learned assessing officer grossly erred in making the addition of ₹ 66,968/- in the appellant's Ashok Vani, Jobat, Distt. Jhabua -: 46 :- income by alleging undisclosed purchases of Mahua , merely on surmises, guess work and conjectures and that too without affording any opportunity of being heard to the appellant on this count. In this context, it is submitted as under: 6.01 At the outset, it is submitted that during the entire course of assessment proceedings, the appellant was not given even a single opportunity on the so called Annexure L/54. 6.02 Without prejudiced to the above, it is submitted that during the course of survey an inventory of loose papers/documents/books comprising of 19 items only was prepa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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