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TMI Blog2019 (3) TMI 1402X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent for all the years. A survey under Section 133A of the Act was initiated in the premises of the petitioner on 12.01.2018. There had been no incriminating material found in the course of the survey as can be seen from the Mahazarnama recorded on the day of survey by the surveying team. 4. A statement under Section 133A was recorded from one of the partners of the firm, one, Mr.A.T.Janakiraman. Since the re-opening of the assessments by the Income Tax Department is based entirely on the contents of the statement, I extract the relevant portions hereunder for better appreciation of the matter. In statement dated 12.01.2018 question nos. 6, 7 and 9 are as follows: Q.6. Have you maintained any books of accounts supporting the turnover reported? Ans. No I have not maintained any proper books of accounts in respect of the turnover reported. But I have maintained month-wise just sales summary ledger as. However individual bills were discarded after making a turnover entry. Hence I am not in a position to provide the individual bills/vouchers day wise. Q.7. Since you have not maintained individual bills and you have provided sales turnover monthwise, your estimated turnover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turn reported its income truly and correctly. In line with the judgment of the Supreme Court in the case of GKN Driveshafts (India) Ltd. Vs. ITO [(2003) 259 ITR 19], the petitioner sought a copy of the reasons on the basis of which the assessments had been re-opened vide letter dated 30.04.2018. The reasons were furnished by the respondent on 28.05.2018 and read as follows: Ref: Your letter dated 25.04.2018. As requested by you the reason for reopening and issue notice under Section 148 of the IT Act 1961 for the Assessment Year 2014-15 is as furnished below. A survey was conducted in this case on 12.01.2018. During the course of survey it was found that the assessee has not maintained any books of account either physically or in system. During the survey, the assessee has agreed with the department that the net profit margin can be taken as 18.75% on the sales turnover of the firm. On perusal of the Return of Income filed for the Asst. year 2014-15 it is observed that the net profit on the sales turnover as admitted by the assessee is only 0.55 on the sales turnover of Rs. 2,27,14,446/- whereas in the sworn statement recorded during the course of survey the partner of the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales turnover as admitted by the assessee is only 0.49% on the sales turnover of Rs. 2,47,88,729/- whereas in the sworn statement recorded during the course of survey, the partner of the Firm has admitted for the net profit margin @18.75%.' 11. It is also relevant to note that Mr.Janakiraman had himself retracted his statement under cover of his communication dated 24.01.2018. The letter states that Mr.Janakiraman was not fluent in English and he thus alleges that he was not aware of the contents of the statement that he was called upon to sign. 12. A counter has been filed by the Income Tax Department wherein, the first point agitated is that the writ petition is not maintainable. Mr.Naveen Duraibabu, learned counsel appearing for the Department states that due sanction has been obtained from the concerned authority and as such the allegation that the proceedings were without jurisdiction was incorrect. There is really no contest as far as this point is concerned and I thus, reject the contention that the proceedings are without jurisdiction on the ground of lack of sanction. 13. As far as the statement of Mr.Janakiraman is concerned, the Revenue contends that Mr.Janakiram ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Departments. Similarly, while recording statement during the course of search & Seizures and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed seriously. Further, in respect of pending asesssment proceedings also, assessing officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders. Your faithfully Sd/-xxxx (S.R.Mahapatra)Under Secretary (Inv.II)' 17. The provisions of Sections 147 and 148 provide for the reopening of assessments and re-assessment of income in cases where the Assessing Officer has reason to believe that income has escaped assessment. It is trite to state that the reasons recorded by the Assessing Officer should be based on tangible materials that have come to his notice/are in his possession. This aspect of the matter has been long settled by a series of judgment of the Supreme court as well a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said expression and deleted the word 'opinion' on the ground that it would vest arbitrary powers in the assessing officer ...' 18. In the present case, there is no dispute on the position that the survey initiated by the Department on 12.01.2018 has yielded no tangible incriminating material. In fact, the Mahazarnama of even date reveals as much. Notwithstanding this, the Department has gone ahead with the impugned proceedings based solely upon the sworn statement recorded under Section 133A from one of the partners. 19. A statement recorded under Section 133A in the course of survey is different and distinct from a statement recorded under Section 132(4) recorded in the course of search and seizure and the evidentiary value ascribed to the two is not the same. The provisions of Section 133A(3) sets out the limits of power endowed upon an Income Tax Authority carrying out survey action as follows: Power of Survey... 133A-....(3) An income-tax authority acting under this section may,- (i) if he so deems necessary, place marks of identification on the books of account or other documents inspected by him and make or cause to be made extracts or copies therefro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of income, such material being concrete and having a live link with the reasons recorded for re-assessment, the aforesaid material may find support from a statement recorded in the course of survey. Not so, in the case of a statement recorded in the course of search which, by itself, would from primary evidence. 22. This issue has also been considered by a Division Bench of the Court in the case of CIT, Salem v. M/s.S.Khader Khan Son (2012) 254 CTR (SC) 228 : (2013) 352 ITR 480 (SC) : (2012) 210 TAXMAN 248 (SC) wherein the Bench states thus: '7. From the foregoing discussion, the following principles can be culled out: (i) An admission is extremely an important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect and that the assessee should be given a proper opportunity to show that the books of accounts do not correctly disclose the correct state of facts, vide decision of the Apex Court in Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973]91ITR18(SC) ; (ii) In contradistinction to the power under Section 133A, Section 132(4) of the Income Tax Act enables the author ..... 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