TMI Blog2017 (4) TMI 1549X X X X Extracts X X X X X X X X Extracts X X X X ..... e them fit as per the requirements of banking authority so that higher working capital limit is granted for the projects undertaken. Disclosure statement made by the partner Mr. Gaurav R. Viradia was retracted on 30th October, 2007 wherein he stated that contents appearing in the statements recorded on 06.10.2007 were never stated by him because it was practically not possible for him to work out such complex financial details in a small period of two to three hours that too after travelling by road from Baroda to Bhavnagar. Assessee firm s partner Mr. Gaurav R. Viradia further denied in his retraction letter about the acceptance and payment of cash in the alleged duplicate set of books of accounts. No attempt was made either in the course of survey or subsequent to survey i.e. up to the date of framing the assessment to call and record the statement of Mr. Kalpesh Vaghani to extract the truth. Also no enquiry was conducted against the partners for the alleged additions in the assessee firm in the given facts when it was an initial year of commencement of business and there was no previous source of capital or accumulated funds of the assessee firm which could be treated as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39; 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 ore; i) In the case of br.S.C.0upta Vs. CIT 248 ITR 782 the Hon'ble Allahabad High Court has held that the additions made on the basis of statement given by The assessee during the survey was an extremely important piece of evidence, Therefore, a statement made voluntarily by the assessee could form the basis of addition. The burden lay on the assesses to establish that the addition made at the time of survey was wrong and, in fact, there was no additional income, , ; ii) In the case of S.S.Ratanchund Bholanath Vs. CIT 210 ITR 682, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 bank book, b) Rs..9000/- deposited in bank for opening new account are entered in duplicate ledger copy also. c) Rs..300/- charged by the bank on 6.3.2007 to issue new cheque book are also entered in duplicate set of account d) A sum of fts.94,600/- has been debited in bank account through cheque No.849004, As per ledger copy of bank in duplicate set of account this payment has been made to M/s.Khodiyar Cement Depot. e) In 58S A/c No.66011406566 bank has charged fts.300/- on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fession 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 first year of business of the assessee firm). Assessee company is engaged in land development and construction of residential and commercial complexes. It was initially formed on 15.11.2007 and was reconstituted on 15.03.2007 by executing supplementary partnership deed. Survey action u/s.133A of the Act was carried out at the business premises of the assessee on 05.10.2007, statements of the Accountant Mr. Nitin Patel a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee could not convinced ld. Assessing Officer and he went ahead completing the assessment making addition of ₹ 2,50,11,000/- u/s.68 of the Act assessing income at ₹ 2,50,11,000/- and for A.Y. 2008-09 against returned income of ₹ 8,97,012/-, income was assessed at ₹ 1,30,51,310/- after making addition of ₹ 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 that mobile of Shri Kalpesh Waghani is switched off therefore I am going to his residence to bring back the Pen drive or back up of the data. (b) In Question No. 20 when Shri Nitin N Patel, accountant was categorically asked to explain as to why the entries found in the office at 49/50, suhas and the entries of copy of accounts -:. (duplicate set) which he has brought are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Therefore it doesn't make any difference as to whether the duplicate set of accounts are recovered from the business premises of the assessee or from any other place suggested by the accountant of the assessee attending the business in absence of any of the partner of the firm. (e) In its reply dated 30.10.2007 the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount 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 ₹ 2,18,00,000/- is made to the income of the assessee u/s 68 of the I T Act, 1961. (Addition ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first year of the incorporation of assessee firm as the return of income filed for A.Y. 2007-08 was for the period of 15.01.2007 to 31.03.2007. There was no accumulated income with the assessee firm which could have been alleged as the undisclosed income. Learned counsel further submitted that the assessee in order to carry on activities as land/property developers initiated process of ranging finance and also started negotiations for acquiring piece of lands on which property could be developed. Further in order to achieve its 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 ₹ 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 fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orroborated by any material either found during course of survey or subsequently brought on record by the department while framing the assessment. 8. We have heard rival contentions and perused the record placed before us and gone through the decisions relied on by learned counsel. In these two appeals of Revenue, 2007-08 and 2008-08, the only issue raised is against deletion of addition by ld. CIT(A) which was made by ld. Assessing Officer u/s.68 of the Act at ₹ 2,50,11,000/- and ₹ 1,21,60,596/-. 9. We observe that the assessee 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 par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not authorized to administer oath and not to take any sworn evidence which alone has evidentiary value as contemplated under law (as held by hon ble Madras High Court in the case of CIT vs. S. Khader Khan Son (2008) 300 ITR 157 and this order of hon ble Madras High Court was confirmed by the hon ble Apex Court also). In the case of assessee also the statements taken u/s.133A of the partner Mr. Gaurav R. Viradia were later on retracted and the only evidence Revenue is harping upon is the duplicate set of books of accounts on which most of the entries, 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, re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in the alleged duplicate set of books of accounts. 4.1(ii) It is seen that the appellant firm was absolutely new and this was the first year of their business. The firm had neither acquired any land in the year under consideration nor had even entered into any agreement for purchase of land etc. The respective land owners have denied having received any cash consideration from the appellant. The AO has not been able to substantiate the payment to any person outside the regular books of accounts as compared to the alleged duplicate set of books. No evidence has been found about 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 mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same while impounding it does not mean that the printout were not taken from the computer of Shri Vghani. It is seen that the computer printouts taken from the premises of Shri Kalpesh Vaghani and this fact has been confirmed in the statement of Shri Vaghani himself. However, the fact that the data had been modified by Shri Vaghani is established. In the absence any other material or evidence to substantiate the fact that the printout taken from the computer of Shri Kalpesh Vaghani represented the duplicate set of books of accounts of the appellant, the same cannot be accepted. The statement recorded 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 incriminat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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