TMI Blog2019 (3) TMI 1157X X X X Extracts X X X X X X X X Extracts X X X X ..... der. So far as expense disallowance is concerned, we find that the disallowance has been restricted to the extent of exempt income earned by the assessee which is in line with the settled legal positions. Therefore, finding no infirmity in the impugned order, we dismiss this ground of revenue’s appeal. No incriminating material was found in the survey proceedings and the additions were made merely on the basis of statement given by the director without bringing on record any evidences either during survey proceedings or during assessment proceedings. It was further noted that these statements made during survey proceedings, on standalone basis, would have no evidentiary value in terms of case of S. KHADAR KHAN SONS [2007 (7) TMI 182 - MA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re during the survey proceedings as the assessee had offered additional income of ₹ 1 crore from merchant trading from China to USA and income from wind turbine at Tamilnadu in his statement recorded on oath u/s. 133A and retraction of the assessee from the sworn in statement was an afterthought.' 2. On the facts and the circumstances of the case, and in law, the Ld. CIT(A) erred in restricting the disallowance made u/s. 14A at ₹ 5,64,729/- comprising of interest expenses of ₹ 4,69,401/- under Rule 8D(2)(ii) and administrative expenses of ₹ 95,328/- under Rule 8D(2)(iii), without appreciating the fact that Rule 8D has a prescribed a formula for calculation of disallowance u/s 14A and the same is binding in n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o account for income from merchant trading from China to USA and income from wind turbine project at Tamil Nadu. On the basis of the same, Ld. AO proceeded to add the same to the income of the assessee since the same was not reflected separately in the return of income filed by the assessee. 2.4 The assessee defended its stand vide rely dated 18/03/2015 by submitting that the same was purely adhoc disclosure and the income expenses relating to merchant trading activities as well as turbine project was properly recorded in the books of accounts and therefore, further addition / disclosure, on that account, was not required. The attention was drawn to the fact that the disclosure made during survey proceedings was subsequently re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition of ₹ 1 Crore is concerned, the assessee agitated the same before first appellate authority vide replies dated 22/08/2016 31/07/2017 wherein the assessee, inter-alia, contended that the sale and purchase transactions from merchant trading activity were duly reflected in the books of accounts and the concerned receipts as well as payments were through banking channels. Regarding wind-turbine project, it was submitted that the assessee generated and sold energy aggregating to ₹ 11.98 Lacs to Tamil Nadu State Electricity Board which was also reflected in the books of accounts under the head Sale of energy and therefore, no further addition, in that respect was warranted. In support the above submissions, attent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 352 ITR 480. Finally, the additions were deleted by making following observations: - 60. As stated earlier, no incriminating evidences were detected either during the course of the survey or the assessment proceedings with regard to the merchant trading activity and the wind turbine project of the appellant. The addition was made by the A.O. relying solely on the statement recorded during the course of survey. As held by the Hon'ble Supreme Court and Hon'ble Madras High Court in the case of S.Khader Khan Sons (supra) and the Hon'ble Mumbai ITAT in the case of Premsons (supra), the statement recorded during the survey does not have any evidentiary value and no addition can be made based on the income admitted in such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence has been brought on record either during survey proceedings or during assessment proceedings so as to support the impugned additions. The additions have merely been made on the strength of statement given by the director during survey proceedings and the same has subsequently been retracted. Such statement, in our opinion, do not carry much evidentiary value unless supported by certain circumstantial evidences and therefore, the reliance of first appellate authority on cited binding judicial pronouncements to arrive at the conclusion was quite appropriate and no infirmity could be found in the same. Another important factor to be noted is that the stated transactions were carried out through banking channels and duly recorded in the bo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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