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TMI Blog2017 (4) TMI 1549X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition of Rs,2,50,11,000/- made u/s.68 of the I.T. Act '61 based on duplicate sets of accounts found during the Survey, 2. The ld, CIT(A) further erred on law and in fact in admitting the retraction statement of the assessee wherein the disclosure made during the survey was retracted even though statement was based on misinterpretation and understanding of the facts. 2.1 The Id.CIT(A) failed to appreciate that the statement of partner Shri Gaurav R. Viradia on behalf of the firm, was recorded during the course of 5urvey u/s.133A of the I.T' Act which has an evidentiary value. The statement has been made voluntarily without coercion or intimidation. As well, the statement was not a forced one, there is no scope for the assesses to challenge the correctness of the assessment. Moreover, while answering to Q.Nos.12 to 17 in the statement recorded u/s,133 of the I.T. Act which are based on the duplicate set of accounts and forms the main base of disclosure. Shri Viradia never stated that the duplicate books do not belong to his firm. 2.2 There are number of judicial decisions where additions teed on the statement made during the survey have been held valid. Some of the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e course of 5urvey u/s.133A of the I.T Act which has an evidentiary value. The statement has been made voluntarily without coercion or intimidation. As well, the statement was not a forced one, there is no scope for the assessee to challenge the correctness of the assessment. Moreover, while answering to Q.Nos.12 to 17 in the statement recorded u/s,133 of the I.T. Act which are based on the duplicate set of accounts and forms the main base of disclosure. Shri Viradia never stated that the duplicate books do not belong to his firm. 2.2 The ld. Commissioner of Income Tax(A) failed to appreciate the bank book entry in duplicate books of account in total agreement (including that of bank account No.) with that of regular books of accounts. No other person can obtain the bank statement and make entry in duplicate set of accounts, which clearly establishes that the duplicate books of accounts found from the computer of Shri Kalpesh Vaghani belongs to the firm of M/s Shree Krishna Corporation and is actually the real books of the said firm. a) In SBS Account No.660I1405450 (Suparshva Project), debit balance in. bank account as on 8,5,2007 is also available in duplicate ledger copy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Hirasingh & Co, Vs. CIT 230 ITR 791 has held that where addition was made on the basis of admission made by the assesses, it was held that the addition was justified, iv) In K.I. Pavunny Vs. Asstt.CCWE 1997 (90 ELT 241)(SC). three judges Bench of Supreme Court observed that if the confessional statement is retracted, the Court is required to examine whether it was obtained by threat, duress or promise and also whether the confession is Truthful, If it is found to be voluntary and Truthful inculpatory portion of the retracted confession can be acted and even conviction can be based upon the same. This view was reiterated in a recent decision of the Apex Court in Vinod Solanki vs. UOI 2009 (233 ELT 157)(SC) 3. On the acts and in the circumstances of the case, the ld. CIT(A) ought to have upheld the order of the AO. 4. It is, Therefore, prayed 1hat the order of the CIT(A) be set aside and that of the A.O. be restored to the above extent. 3. For proper adjudication of facts, we well take up A.Y.2007-08 as the lead year. 4. Briefly stated facts as culled out from the records are that assessee is a partnership firm incorporated on 15.01.2007 (assessment year 2007-08 is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansactions with the firm. It was also contended that statements made during the course of survey u/s.133A do not carry any evidentiary value and addition can be made only if they are corroborated with documents found at the business premises of the assessee, which was not the case of assessee as no incriminating material was found at the business premises of the assessee. However, these submissions of the assessee could not convinced ld. Assessing Officer and he went ahead completing the assessment making addition of Rs. 2,50,11,000/- u/s.68 of the Act assessing income at Rs. 2,50,11,000/- and for A.Y. 2008-09 against returned income of Rs. 8,97,012/-, income was assessed at Rs. 1,30,51,310/- after making addition of Rs. 1,21,60,596/- u/s. 68 of the Act by observing as follows: "The statement of the assessee that the duplicate set of books of account doesn't belong to it/ is baseless on the following grounds :- (a) As already discussed at page No. 10/21 of the order that Shri Nitin N Patel, accountant in reply to Question No. 13,14, & 15 admitted that the Pen drive given by M/s Krishna developers is with Shri Kalpesh Waghani and further in reply to Question No 17 he says tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is carried on therein or not, in which the person carrying on the business or profession states that any of his books of account or other documents or any part of his cash or stock or other valuable article or thing relating to his business or profession are or is kept. By virtue of explanation to Sec 133A an income-tax authority can enter into even the third party premises where the assessee / his representative states that books of account are kept at the premises of third party in a situation where the books of account are not found at the business premises of the assessee. The case of the assessee is fully covered by the provisions of this explanation as at the commencement of survey, none of the partners was available and the books of account / documents which are supposed to be kept at the business premises were also not there. In these circumstances the books of account were recovered from the computer of Shri Kalpesh Waghani, accountant of the assessee at the instance of Shri Nitin N Patel another accountant of the assessee, no matter that Shri Nitin N Patel was perhaps unaware of the fact that back-up of the data brought by him was in fact duplicate set of accounts. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above it is amply clear that the submissions made by the assessee are baseless and ill-conceived after thought as they do not make specific reply to the specific queries. Therefore the theory of retraction of disclosure made by the assessee is not acceptable. The assessee had made disclosure of Rs. 2,18,00,0007- on account of unaccounted cash receipts found in duplicate set of accounts for F.Y 2006-07 relevant to A.Y 2007-08 which has not been offered by the assessee as additional income in the return for A.Y 2007-08. Therefore an addition of Rs. 2,18,00,000/- is made to the income of the assessee u/s 68 of the I T Act, 1961. (Addition Rs. 2,18,00,000/-) 12. Further, following cash receipts were found directly in different project: In center point project: Rs. 1 From Jayprakash 41,000 2 From Dilipsinh Chudasama 1,25,000 In Siddhi Vinayak Project: 3 From D. K. Shah on 20.02.2007 9,999 From D. K. Shah on 03.03.2007 9,35,000 From D. K. Shah on 05.03.2007 5,00,000 From D. K. Shah on 09.03.2007 7,00,000 From D. K. Shah on 10.03.2007 9,00,000 Total 32,10,999 The assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... object of property/land development planned three projects in the name of Center Point, Suparshva and Siddhivinayak at different locations. Bank accounts in the name of these three projects were opened on 06.03.2007 by depositing cash of Rs. 9000/- in each account. Further to meet the working capital requirements, assessee applied for sanction and disbursement of credit facility to State Bank of Saurashtra, Vaghavadi Road Branch, Bhavnagar on 30th March, 2007 and the credit facility was sanctioned on 25.04.2007 and disbursement was made towards purchase of land and construction thereon. In this sequence, assessee in order to get higher bank credit facility engaged a financial consultant to prepare the projected accounts according to the needs of bank. The projected entries in the alleged duplicate set of books of accounts were made in such a manner so far as to indicate borrowing capacity of firm as well as sound financial capacity of partners by making the dummy entries in the projected accounts. He further added that survey u/s.133A of the Act was conducted at business premises on 05.10.2007 which came to be concluded on 06.10.2007. No incriminating material was found at the bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm is engaged in the business of property and land development and real estate related activities. It came into existence in the fourth quarter of financial year 2006-07 relevant to assessment year 2007-08. It was the very first year of commencement of business. Survey u/s.133A of the Act was carried out on business premises of assessee on 05.10.2007 which was concluded on 06.10.2007. Undisputedly, no incriminating material of whatsoever nature was found at the business premises of the appellant by the survey party in the form of excess cash, evidence of unaccounted borrowings, investments and expenditure. The statement of one of the partner Mr. Gaurav R. Viradia was taken on 06.10.2007 who reached from Baroda on second day of survey. Genesis of the impugned addition was the duplicate set of books of accounts extracted from the residence of Mr. Kalpesh Vaghani but printed at the office of assessee on 09.10.2007. Mr. Kalpesh Vaghani came into picture during the course of survey when it was informed to the survey team that books of accounts are in the computer of Mr. Kalpesh Vaghani who has been appointed for preparing projected financial statements for the purposes of taking bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as admitted by the Accountant and the Consultant have been manipulated / enhanced / modified / re-arranged in order to prepare projected financial data to be provided to banks for getting sanctioned higher working capital credit limits for running the projects undertaken by the assessee firm. In view of totality of facts and discussion made above, we find no reason to interfere with the order of ld. CIT(A) who has deleted the impugned addition u/s.68 of the Act by giving a detailed finding which reads as follows: "4. I have carefully gone through the findings given in the assessment order, submissions of the AR of the appellant, remand reports of the AO. On perusal of the grounds of appeal it is seen that the appellant has objected to the addition of Rs. 2,50,10,999/- made merely on the basis of statement of partner Shri Gaurav R Viradia in the course of survey u/s 133A wherein he admitted certain incomes on the basis of trial balance printed from the computer data found at the residential premises of Shri Kalpesh Vaghani. Shii Viradia admitted income to the extent of Rs. 2,18,00,000/- for the year under consideration stating the same as having been received as booking advance par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bout the cash being paid for purchase of land. The inflated purchases as appearing in the alleged duplicate set of books of accounts have also not been established with any enquiries or evidence. The persons from whom money has been shown as received in cash i.e. Bharatbhai, Fathabhai and Kalpeshbhai have not been allotted any units in any of the projects of the appellant. Kalpesh Vaghani who is engaged in writing accounts and arranging bank finance etc apparently has no capacity to lend money to the extent, appearing in alleged duplicate set of accounts. He has not even been questioned about the money allegedly advanced by him. The appellant has acquired land from Shri D.K. Shah for the Suparshva Project in the next assessment year. The appellant was therefore, liable to make payment to Shri D.K. Shah against land. There could be no occasion for the appellant to receive any amount to the extent of Rs. 30,44,999/- from him that too for the unrelated Siddhivinayak Project. It is also seen that no units have been allotted in any of the projects to Shri D.K Shah, Shri Dilip Singh and Shri Jay Prakash in whose name amount have been shown as received in the computer printout. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d during the course of survey does carry significant weight but when the same has been retracted and there is no other material or evidence to support the disclosure made no addition could be made on the basis of such retracted statement. The AO despite of all inquiries made by him has not come out with any evidence or circumstance which can support his claim. It is a settled proposition of law that no addition can be made merely on the basis of statement recorded in the course of survey which has no evidentiary value unless such statement is supported by other incriminating material or evidences. In the case of the appellant nothing adverse to the appellant was found from the business premises and persons named in the alleged duplicate set of books of accounts have denied such transactions on oath. : 4.1(iii) Under these circumstances it cannot be established that the printouts represented duplicate set of books of accounts of the appellant. That being so, in the absence of any other material or evidence against the appellant, no addition could be made on the basis of the print outs obtained from the residence of Shri Kalpesh Vaghani. The addition made by the AO of Rs. 2,50,10 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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