TMI Blog2018 (10) TMI 925X X X X Extracts X X X X X X X X Extracts X X X X ..... es. Thus, the ratio in the case of Kailash Ben Manharlal Chokshi [2008 (9) TMI 525 - GUJARAT HIGH COURT] cannot be imported to the facts of the instant case. As during the course of survey the assessee surrendered income of ₹ 1,30,19,418/- which included surrender on account of unexplained cash of ₹ 9,25,018/- unexplained creditors of ₹ 29,56,944/- and unexplained investment in machines and moulds of ₹ 91,37,456/-. The assessee has duly honoured the surrender of unexplained cash and unexplained creditors. It cannot be understood as how, there is no allegation of pressure or intimidation in respect of surrender of unexplained cash and unexplained creditors and there is only pressure or intimidation in respect of unexplained investment in machines and moulds. As during the course of survey proceeding, the assessee tendered cheques amounting to ₹ 40,23,000/- corresponding to the tax liability on the income surrendered ₹ 1,30,19,418/-. The cheques were deposited in bank by the tax authorities subsequent to the survey proceedings. If the statement was recorded under pressure or intimidation, the assessee should have objected immediately and requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- 12-10-2018 - Smt. Diva Singh, Judicial Member And Shri O.P. Kant, Accountant Member For the Appellant : S/sh. K. Sampath Raj Kumar, Advocates For the Respondent : Sh. S.R. Senapati, Sr.DR ORDER PER O.P. KANT, AM: This appeal by the assessee is directed against order dated 18/01/2016 passed by the Ld. Commissioner of Income-tax (Appeals)-32, New Delhi [in short the Ld. CIT(A)] for assessment year 2011-12, raising following grounds: The Ld CIT(A) has erred in confirming the addition of ₹ 91,37,456/- on account of Machinery Surrendered during the survey ignoring the facts (a) During the survey, the officer found 6 new machines and 20 moulds in the factory for which documents were not available. As the machines were received on the date of survey and were pending for installations they are yet to get bills and have also not made payments. (b) That due to pressure at the time of survey, the assessee reluctantly surrendered ₹ 91,37,456/- being the value of machines (yet to be installed) and moulds for which bills were yet to be received. (c) That subsequently the bills were received, however the machines did not work proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 4. The facts qua the issue in dispute are that during the course of survey, the survey team found six new injection moulding machines and 20 moulds in the factory premises for which no bills or vouchers were found. During the course of survey statement of the partner of the assessee firm, Sri Ashwini, Sachdeva was recorded , wherein he failed to furnish satisfactory explanation as regard to the existence of the above machineries and thus he surrendered the value of the 6 injection moulding machines (Rs.14 lakh each) and 20 moulds (Rs.35,000 each ) alongwith cartage charges (Rs.37,756) totalling to ₹ 91,37,456/-. The assessee firm also paid tax of ₹ 40,23,000/- on the entire surrendered income of ₹ 1,30,19,418/- made during the course of survey operation, which included the surrender of ₹ 91,37,456/- also. 4.1 During assessment proceeding, the assessee explained that the said surrender was under pressure by the survey team and it was not a voluntarily surrender. The assessee submitted that 6 injection moulding machines were purchased from M/s Aman Hydraulics (India), New Delhi, vide their invoice Nos. 84 and 87 dated 01/10/2010. Regarding 20 PV ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has not claimed that the cheques were taken by the department by force. For the sake of imagination even if it is assumed that the cheques too were obtained by the department by force even then the assessee had sufficient time to get the clearing of the cheque stopped by writing a simple letter to the bank. The partners of the assessee firm were not confined by the department after the Survey. 4.3 The Ld. CIT(A) also rejected the contention of the assessee that machinery were returned back to the supplier. The observation of the Ld. CIT(A) in this regard are reproduced as under: The assessee has filed copies of correspondences with the manufacturer M/s Aman Hydraulics. The assessee vide it's letter dated 18/10/2010 addressed to Nishant Ahmed of M/S Aman Hydraulic has mentioned that it had ordered the injection machines in June 2010 and the machines were supposed to be delivered in September 2010. The machine were delivered late on 1/10/2010. If the machines were to be delivered in Sept 2010 and had been delivered on 1/10/2010 how can it be said late. Any way if the order was placed in June for machinery which appears to be custom made for assessee. The norm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) also observed that fact of the purchase of the machines and return thereon was not recorded in the audited accounts. The relevant observation of the Ld. CIT(A) is reproduced as under: The assessee has also filed copy of the audited accounts. In the audit report in the form 3CD the list of assets has been given. In the list of assets addition of assets up to 01/10/2010 and addition of assets after 01/10/2010 has been given. These machines do not find place in the list of additions either upto 01/10/2010 or after 01/10/2010. The assessee itself has admitted that the machines were installed and were put on trial production. Then the machines should have been shown in the list of additions up to 01/10/2010 or in the list after 01/10/2010. On return of the machines machine account should have been credited. 4.7 In view of the above analysis, the Ld. CIT(A) upheld the addition observing is under: It is therefore held that the assessee did acquire machines and moulds worth ₹ 91,37,456/- out of its undisclosed income. Once the machines were noticed in the Survey operation, the assessee disclosed additional income of ₹ 91,37,456/- and paid tax on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Gujarat in the case of KailashBen Manharlal Chokshi Vs CIT reported in 328 ITR 411. 7. He further submitted that the authorised officer is not empowered to take a statement on oath during the course of survey proceeding and thus the statement recorded during the course of survey proceeding on oath cannot be admitted as evidence without corroborating with other evidences. In this regard, the learned counsel relied on the decision in the case of S. Khader Khan Son reported in 352 ITR 480 (SC). The learned counsel also relied on the decision of the Hon ble High Court of the Delhi in the case of Dhingra Metal Works reported in 328 ITR 384 and submitted that the statement recorded during the course of survey is not a conclusive piece of evidence. 8. The learned counsel referred to pages 116 to 142 of the paper book, which contain copy of letter filed before the Assessing Officer. According to the learned counsel, the assessee explained before the Assessing Officer that during the course of survey, Sh Sachdeva stated that bills of the machines were not received and no payment was made in respect of those machines, but however on pressurising, he offered to surrender the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machines has been recorded. He also submitted that the so-called supplier of machines M/s Amaan hydraulics (India) was not recorded as creditor in the books of accounts of the assessee. According to the Ld. DR the entire story of receipt of machines from M/s Amaan Hydraulics (India) and return thereof is an afterthought only as during the course of survey proceeding the assessee did not provide name of any supplier or copy of the bills received there from. He submitted that moulding machines are product subject to excise duty and no manufacturer would supply those machines without receiving any payments. According to him, the payment for machinery must have been paid out of undisclosed sources and the story of receipt of machines from M/s Amaan hydraulics (India) has been presented to take back the amount of tax paid on said undisclosed income during the course of survey proceedings. He accordingly submitted that addition in dispute should be sustained. 12. In the rejoinder, the learned counsel submitted that the ratio in the case of Avinash Mishra (supra) is not applicable over the facts of the instant case. He further submitted that machinery was received on approval and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercion and duress and in support thereof an affidavit was also filed. The Assessing Officer did not consider the explanation on the ground that retraction was made after delay of 2 months. The Hon ble High Court in the circumstances held that no credit can be given to a statement recorded at midnight when a person may not be in a position to make any correct or conscious disclosure . Further, in said case the Revenue could not brought any evidence on record in support of said disclosure and thus addition was deleted. 15. We find that on issue of recording statement at midnight though the assessee has alleged that the statement was recorded under pressure and intimidation, but according to us, the above allegation is not substantiated by any of the evidences. The relevant question and answer of the statement of Sh. Sachdeva are reproduced as under: Q 17. As per physical stock inventory of goods, documents/records cash, following discrepancies have been notices, which you are required to explain. (i) As per books of accounts, the cash in hand is shown at ₹ 96,431/-. However, as physical verification cash has been found at ₹ 10,21,449/-, excess cash ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not got the bills and have also not made payment for these machines and moulds etc. Further, regarding the shortage of stock valuation by ₹ 45,776/-, it is stated that the difference of 45,776/- is quiet insignificant keeping in view the total stock of ₹ 1,12,60,354/- and it is further submitted that all the stock has been properly account for in the excise record also. However, to buy piece of mind, I surrender ₹ 38,81,962/- (Sundry Creditors of ₹ 29,56,944 and excess cash in hand of ₹ 9,25,018/-) as additional income of the firm M/s Alert India in the current F.Y. 2010-11 relevant to A.Y. 2011-12 in addition to be normal income subject to the condition that no penalty or prosecution proceedings will be initiated against M/s Alert India or its partners. Q18. Regarding 6 new machines (Injection Moulding machines) and 20 Moulds, your explanation mentioning that above machines and moulds have been purchased by you which are lying in your promises to which no bills have been produced nor any payment is stated to have been made is not acceptable. Please explain. Ans. To buy piece of mind, I surrender further ₹ 91,37,456/- being the value o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es subsequent to the survey proceedings. If the statement was recorded under pressure or intimidation, the assessee should have objected immediately and requested the bank to dishonour those cheques. As far as records of the case before us, no such request was made by the assessee either to the Income-tax Authorities for not to deposit the said cheques or to the bank authorities to stop the payment of those cheques. Further, we also find that Sh. Sachdeva did not file any letter making allegation of pressure and intimidation before the Assessing Officer. Sh. Sachdeva also did not file any letter or statement retracting his statement made during the course of survey proceedings. In this case, since the assessee did not declare the income surrendered of ₹ 91,37,456/- in the return of income, it has been deemed by the assessee as retraction of the statement of Sh. Sachdeva. In view of the above facts and circumstances, we are of the opinion that the allegation of pressure and intimidation on Sh. Sachdeva by the survey team is without any basis or supporting evidence and accordingly same are rejected. 19. The second issue is whether the statement recorded on oath under su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o had not been explained . In such circumstances, the Hon ble High Court set aside the order passed by the Tribunal. In the above case, the Hon ble High Court distinguished the decision of the Madras High Court in the case of CIT Vs. Khader khan Son reported in 300 ITR 157, observing as under: 14. The learned counsel for the Assessee relied upon the decision of the Madras High Court in CIT V. Khader Khan Son (2008) 300 ITR 157 (Mad.). In the said case, during the search action, one of the partners of the Assessee made a statement under Section 133A of the Act offering additional income. Less than 10 days thereafter, on 3rd August, 2001, the statement was resuled from in writing. This again, therefore, makes the case distinguishable from the case in hand where the Assessee has waited for 2 years to resile from the declaration earlier made. 15. On the side of Revenue, reliance was placed on the decision in Raj Hans Towers Pvt. Ltd. Vs. Commissioner of Income Tax-V (2015) 373 ITR 9 (Del.) where the Court explained the evidentiary value of a statement under Section 133A of the Act. 16. The Court finds that in the present case, the ITAT erred in relying upon the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducing evidences. During the course of the survey preceding the partner of the assessee firm failed to explain source of investment in said machines and thus he surrendered. But in the assessment proceeding, the assessee submitted explanation that those machineries were purchased from M/s Amaan Hydraulics (India) and were delivered on 01/10/2010 i.e. on the date of survey and thus could not be installed. The assessee submitted that Invoice/Bill of those machines were not received on the date of the survey and therefore could not be entered in the books of account. Before us, the learned counsel has submitted that purchase of the machinery was not recorded and books of account as same was received on approval. Regarding source of investment, the assessee has submitted that no payment was made to the party and those machines have been returned back in view of the defects in those machines. Thus according to the assessee, no payment was made to the supplier for acquiring the machines and therefore there is no requirement to discharge the onus of source of acquisition by the assessee. 23. The Ld. CIT(A) has found various faults in the above explanation of the assessee to justify t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. The injecting moulding machines are quite bulky and not small machines, which could be transported personally by hand. The photocopy of the receipt issued by Mallik Transport Company is not bearing signature of the person, who issued the receipt and also not carrying any service tax registration number of the transporter. The assessee has also submitted copy of the so-called letters exchanged between M/s Amaan Hydraulics (India) and the assessee, which are available on page 127 to 137 of the paper book. There are no supporting evidence as how those letters were delivered, whether by post or by Courier or by any other means of delivery. 28. In view of the above observations, prima facie the preponderance of probability goes against the assessee. 29. Notwithstanding our above observations, one important link which is missing in the entire analysis of evidences, is that no inquiry has been made by the lower authorities in this respect from M/s Amaan Hydraulics (India). The assessee has claimed before us that all those documents were filed before the lower authorities. We find that the authorities have not examined whether said party was engaged in manufacturing of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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