TMI Blog2018 (2) TMI 1804X X X X Extracts X X X X X X X X Extracts X X X X ..... ng documents, which were available on record and, therefore, in our view, there was no justification for having rejected the income deduced by the assessee from the project in its return of income. Accordingly, we hereby set-aside the order of CIT(A) and direct the Assessing Officer to delete the addition - decided in favour of assessee. - ITA NO. 795/MUM/2015 - - - Dated:- 23-2-2018 - SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER For the Appellant : Dr. K. Shivaram Shri Rahul Hakani For the Respondent : Shri Rajesh Kumar Yadav ORDER PER G.S. PANNU, AM : The captioned appeal by the assessee is directed against the order of CIT(A)-30, Mumbai dated 11.11.2014, pertaining to the Assessment Year 2006-07, which in turn has arisen from the order passed by the Assessing Officer, Mumbai dated 24.12.2008 under section 143(3) of the Income Tax Act, 1961 (in short the Act ). 2. In his appeal, the appellant has raised the following Grounds of appeal:- I. Addition of ₹ 74,63,557/- : 1. The learned CIT(A) erred in confirming the order of the A.O. estimating the income of the assessee merely on basis of the statement c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upancy Certificate issued by the Municipal Corporation on 31.10.2005. Since no income thereof has been declared by the assessee, in the statement recorded a question was put to the assessee with regard to the same. In response, assessee submitted that no return of income for Assessment Years 2004-05, 2005-06 and 2006-07 were filed and that the income from said project could be computed by estimating it on the basis of the Work-In-Progress (WIP) declared for Assessment Year 2003-04. Therefore, the assessee declared an income of ₹ 1,00,00,000/- from the said completed project, and in the answer at the time of survey, the working thereof was also enumerated, which is reproduced hereinafter :- Declared closing WIP as on 31/03/2003 Rs.2,43,36,202/- Add. Estimated expenses towards Construction from A.Y. 04/05 To A.Y. 06/07 Rs.6,00,000/- Total Closing WIP As on 31/03/2006 Rs.2,49,36,202/- B) Sale proceeds from sale of flats Rs.3,47,12,500/- C) Income from project (B-A) Rs.99,76,298/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15.03.2007 was also made in terms of which it was contended that the income declared at the time of survey was a rough financial estimate, which was subject to amendment after finalisation of accounts. In sum and substance, the stand of the assessee was that the income declared at the time of survey was a rough estimate, whereas the return of income was filed on the basis of audited accounts compiled with reference to the corresponding evidences, material, etc. The Assessing Officer did not accept the explanation furnished by the assessee and instead, noted that the declaration of income of ₹ 1,00,00,000/- made at the time of survey was binding on the assessee and the same could not be retracted. Further, the Assessing Officer noted that the retraction, if at all permissible, was delayed and, therefore, the same could not be accepted. Thirdly, the Assessing Officer noted that the assessee was called up to produce the books of account and the relevant documents, which were not so produced, therefore, the Assessing Officer concluded that assessee ought to have declared the income from project at ₹ 1,00,00,000/- as against ₹ 25,36,440/- declared in the return of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition is concerned, there is no dispute that when the survey action took place on 12.03.2007, the account books of the assessee were incomplete and the returns of income for Assessment Years 2004-05 to 2006-07, i.e. including for the assessment year under consideration, were not filed. It is also not in dispute that the project undertaken by the assessee, namely, Nikita Enclave was complete in view of the Occupancy Certificate dated 31.10.2005 issued by the Municipal Corporation. It is also not in dispute between the assessee and the Revenue that the income thereof, on completion of the project, was liable to be declared during the previous year relevant to the assessment year under consideration, i.e. 2006-07. The manner in which assessee proceeded to offer the income at the time of survey, on an estimate basis has already been reproduced by us in the earlier part of this order. Quite clearly, the estimation is based on the value of the WIP as appearing on 31.03.2003, and the expenses have also been estimated for Assessment Years 2004-05 to 2006-07. Assessee adopted the sale proceeds of the project at ₹ 3,47,12,500/- and, after computing the total expenditure of ₹ 2, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee who made the admission to show that it was incorrect. As per the Hon'ble Supreme Court, it was imperative that in such a situation assessee ought to be given a proper opportunity to show the correct state of facts. In fact, in the case before the Hon'ble Supreme Court, assessee was attempting to show that the entries made by it in the account books did not disclose the correct state of facts. The Hon'ble Supreme Court recognised the right of the assessee to do so on the premise that it was open to the assessee who made the admission to show that the same was incorrect. In other words, as per the Hon'ble Supreme Court, the admission made on an anterior date, which was not based on correct state of facts, was not conclusive to hold the issue against the assessee. In our considered opinion, in the present case, the stand of the assessee is much more convincing since the original declaration itself is not based on any books of account or supporting documents, but was merely an estimate, whereas the return of income has been filed on the basis of audited accounts and the principal areas of difference, namely, the amount of sale proceeds and the expenditure are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been sought from the decision of the Tribunal in the case of Hiralal Maganlal and Co. (supra). In this context, we may note that the Mumbai Bench of the Tribunal in the case of Hiralal Maganlal and Co. (supra) was dealing with a statement recorded u/s 132(4) of the Act at the time of search, whereas presently we are dealing with a statement recorded u/s 133A of the Act at the time of survey. Pertinently, the Hon'ble Supreme Court in the case of S. Khader Khan Son (supra) has upheld the judgment of the Hon'ble Madras High Court in the case reported in 300 ITR 157, wherein the difference between Sec. 133A and 132(4) of the Act was noted and it was held that the statement u/s 133A of the Act would not have any evidentiary value. In fact, as per the Hon'ble Supreme Court, such a statement made at the time of survey could not be the sole basis for assessing income in the hands of the assessee. On this aspect, we may also refer to the Circular of CBDT no. 286/2/2003 (Inv.) II dated 10.03.2003, wherein it has been observed that the assessments ought not to be based merely on the confession obtained at the time of search and seizure and survey operations, but should be based ..... 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