TMI Blog2018 (7) TMI 944X X X X Extracts X X X X X X X X Extracts X X X X ..... tment By : Shri Dr. Milind Bhusari, CIT DR ORDER PER JASON P. BOAZ, A.M. This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-II, Nagpur, dated 28/12/2010 for Assessment Year 2006-07. 2. Briefly stated, the facts of the case are as under:- 2.1) The assessee, a firm engaged in business as a dealer in pharmaceutical products and agent for pharmaceutical agencies, State Government agencies and Municipal Corporations etc., filed its return of income for Assessment Year 2006-07 on 30/10/2006 declaring total income of ₹ 1,13,20,210/-. A survey under section 133A of the Income Tax Act, 1961 (hereinafter referred to as the Act ) was conducted at the assessee s business premises on 28/11/2006. In the course of survey, a statement of Shri Kiran Somalwar, who is the partner of assessee s firm, was recorded under section 131 of the Act on 28/11/2006, wherein he stated that commission paid by the assessee and its sister group concerns to M/s. Litaka Pharmaceuticals Ltd., were admittedly not genuine. According to the deposition of Shri Kiran Somalwar, these commission payments made by the assessee are not genuine, as no servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various additions/ disallowances. 2.3) Aggrieved by the order of the assessment, dated 29/12/2008 for Assessment Year 2006-07, the assessee preferred an appeal before the ld. CIT(A)-II, Nagpur. The ld. CIT(A) disposed of the appeal vide impugned order dated 28/12/2010 and allowed partial relief to the assessee. 3. The assessee, being aggrieved by the order of the ld. CIT(A)-II, Nagpur dated 28/12/2010 for Assessment Year 2006-07, has filed this appeal, wherein it has been raised the following grounds:- 1) Addition as undisclosed income in respect of commission expenses treated as non-genuine ₹ 96,82,058/- On the facts and circumstances of the case and in law, the ld. CIT(A) erred in upholding the arbitrary addition as the appellant s undisclosed income a sum of ₹ 96,82,058/- in respect of commission expenses treated as non-genuine, relying purely upon the statements made at the time of / in connection with the survey under section 133A, though validly retracted subsequently, without any cogent/ corroborating material to support and also ignoring/not appreciating in right perspective the appellant s submissions as well as the evidence produced. The appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 04/09/2015 has considered and decided this issue in favour of the assessee and against the Revenue. It is submitted by the ld. AR that in view of the aforesaid decision of the ITAT, Mumbai J Bench in the case of assessee s associate concerns (supra) on identical facts and issues for the very same Assessment Year 2006-07, the assessee s appeal on this issue should be allowed. 4.1.2) In support of the aforesaid contentions that the statements recorded in the course of survey have no evidentiary value, the ld. AR placed reliance on the following judicial pronouncements:- i) CIT vs. Khader Khan Son [(2013) 352 ITR 480(SC)] ii) CIT vs. S. Khader Khan Son [(2008) 300 ITR 157 (Madras HC)] iii) Paul Mathews Sons vs. CIT [(2003) 263 ITR 101 (Kerala - HC)] iv) Pullangode Rubber Produce Company Ltd. vs. State of Kerala [(1973) 91 ITR 18] 4.1.3) The ld. AR also placed reliance on the following judicial pronouncements in support of the assessee s contention that relying on the statement of third party without providing assessee an opportunity for cross-examination, is bad in law:- i) M/s. Andaman Timer Industries vs. Commissioner of Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its order in ITA Nos. 33 34/NAG/2011 dated 04/09/2015. The Tribunal after considering the identical factual matrix, decided the issue in favour of the assessee and against the revenue by holding as under at para Nos. 10 11:- 10. We have considered the rival submissions, the facts on record before us and various judicial pronouncements referred to by the Ld. AR. We first refer to relevant queries and answers to of the statement recorded on 28.11.2006. In reply to question no. 8, partner of the assessee replied that that the commission charges paid to M/s. Litaka Pharmaceuticals Ltd were not genuine and no services were rendered by the said company and these were only book entries. In the second statement recorded on 29th Nov. 2006, in reply to question no. 2, the partner of the assessee reiterated the commission was bogus and these were only accommodation entries. 10.1 We note that vide letter dated 16.01.2007 exhibited at page no. 64 to 66 of the paper book, No 1, filed by the assessee, Shri Vijay Wasudeo Somalwar partner in assessee retracted the statements recorded on 28th and 29th Nov. 2006 exhibited at page no 64-66 of paper book No.1. The retraction letter is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... office residence. Our mother who is 82 years old is diabetic cardiac patient could not have stood of even hearing the news of raid. Hence we wanted to avoid it at all cost decided to concede to all the demands as the Survey team to begin with. 5. That the firms have not paid any bogus commission to any party whomsoever. Thus all the contents of the said statements taken on 28th and 29th November, 2006 are not factual. Each and every claim of commission is genuine and incurred for the purposes of business against the services rendered by the recipient. 6. I am therefore constrained to retract the same in view of his mental state then which pleas accept The contents of the said statements should be treated as binding on us or the said firms. That all the commission is paid through account payee cheques the same was accepted by the parties. That M/s. Litaka Pharmaceuticals has nowhere mentioned that the commission paid was bogus nor they have mentioned that the commission paid is not genuine. We have deducted paid TDS also paid service tax on the commission paid. 7. Therefore we hereby request that you may send inferences of your investigations to comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble High Court finds that such a power to examine a person on oath is specifically conferred on authorized officer only u/s 132(4) of the income tax act in the course of any search and seizure. Thus, the Income Tax whenever it thought fit and necessary to confer such power to examine a person on oath, the same has been specifically provided whereas section 133A does not empower the AO to examine any person on oath. On the other hand, whenever the statement recorded u/s 133A of the Income Tax Act, it is not given any evidentiary value obviously for the reason that officer is not authorized to administer the oath and to take any sworn statement which alone has evidentiary value as contemplated under law. 10.5 In ITA No. 4698/Mum/2006, for assessment year 2003-04 the Mumbai Bench of Tribunal in the case of DCIT Vs. Prem Sons held that without any material to correlate the additional income surrender during the survey u/s 133A, addition cannot be made when surrender is retracted. 10.6 Further it was held in the case of Pullangod Rubber Produce Company Ltd. Vs. State of Kerala [1973] 91 ITR 18 (SC), that an admission is an extremely important piece of evidence but it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the signature of the deponent nor of any officer, thus, in our view, its evidentiary value is also under cloud. Thus, this ground is, therefore, allowed in favour of the assessee. 4.3.3) Respectfully following the decision of the ITAT, Mumbai J Bench in the case of the assessee s sister concerns M/s. D.S. Agencies and, M/s. Usha Distributors in ITA Nos. 33 34/NAG/2011, dated 04/09/2015 (supra), we allow this ground No.1 in favour of the assessee. 5. Ground No.2 relates to ad hoc disallowance of ₹ 50,000/- 5.1) In this ground, the assessee had challenged the impugned order of the ld. CIT(A) in upholding ad hoc disallowances restricted to the extent of ₹ 50,000/- in respect of ad hoc disallowances made by the Assessing Officer of Transport expenses of ₹ 1,00,000/-; Sales Commission of ₹ 50,000/-; Travelling Expenses of ₹ 1,00,000/-; Transportation Charges of ₹ 1,00,000/- and Guest House Expenses of ₹ 2,94,200/-, for want of supporting bills / vouchers/ evidence. Since, this ground was not urged before us in appeal proceedings, this ground No.2 is dismissed as not pressed. 6. Ground No.3 being general in nature, no adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X
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