TMI Blog2023 (1) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... stock and in the letter of retraction, the assessee asserted that heavy paper reels weighed in average about 300 kgs 400 kgs per reel. The survey team had not taken reels of paper for weighment they did not have any equipment to verify the weight or value of stock. No physical inventory was ever prepared by the survey team and the value of stock was assumed without any basis or physical inventory and that the assessee was forced to accept the excess stock under pressure. The contention of the assessee before the Ld. AO/CIT(A) was that the average weight per reel is 346 kgs whereas the survey team had taken average weight of one reel as 680 kgs which is completely misplaced. The paper is an excisable item and the assessee had filed stock returns with the Custom Central Excise Department and the returns for the period from April, 2007 to September, 2007 was placed before the Ld. AO/CIT(A) and no discrepancy was found either by the Central Excise Department or by the Revenue Authorities therein. During assessment proceedings production of stock register was insisted upon, though the assessee in reply to question No. 34 has stated that he is not maintaining any stock register be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. We have earlier observed that these additions are not sustainable even on merits. 50% disallowance out of rent paid by the assesee to his wife which has been confirmed by the Ld. CIT(A) - AO accepts that business letters of the assessee are being received at the premises for which rent is being paid by the assesee. The case of the assessee is that the premises was being used for placement of orders for purchase, meeting with suppliers, arranging dispatches, delivery etc. In none of the earlier years disallowance out of such rent has been made in assessments completed under section 143(3) of the Act. We agree with the submissions of the assessee and hold that no such adhoc disallowances based on surmises alone can be sustained. The impugned disallowance is deleted. - ITA No. 345/Del/2014 - - - Dated:- 19-12-2022 - SHRI ANIL CHATURVEDI , ACCOUNTANT MEMBER AND MS. ASTHA CHANDRA , JUDICIAL MEMBER Assessee by : Shri Assem Chowla , Advocate Shri Manu K. Giri , Advocate Ms. Barayar Khan , Advocate Department by : Shri Abhishek Kumar , Sr. DR ORDER PER ASTHA CHANDRA , JM The appeal by the assessee is directed against the order dated 08.11.2013 of the Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of additional facts. Moreover, these additional grounds are necessary for proper appreciation of the issue in appeal and would sub-serve the cause of substantial justice. Reliance has also been placed on the judgment of Hon ble Supreme Court in National Thermal Power Co. Ltd. vs CIT (1998) 229 ITR 383 (SC)). 5. Let us take notice of the facts in brief. The assessee is an individual and engaged in the trading of all kinds of papers used in packaging under the name M/s. Bankey Bihari papers. A survey under section 133 A of the Income Tax Act, 1961 (the Act ) was carried out on 19.09.2007 and 20.09.2007 in the premises of the assessee. During the course of survey operation the assessee is stated to have voluntarily surrendered Rs. 75,00,400/- which comprised of Rs. 56,71,600/- for excess stock, Rs. 9,78,800/- for excess cash and Rs. 8,50,000/- for investment in construction WIP. The assessee deposited the whole tax of Rs. 24,91,000/- on 20.09.2007. According to the Learned Assessing Officer ( AO ) when statement was recorded, each page was signed by the assessee himself. Inventory of cash and stock was prepared and copies thereof given to the assessee. Cash was also inventor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation. 8. The gist of the twin questions is that section 133A of the Act does not envisage recording of statement of the assessee and his wife on oath and therefore, the Ld. Assessing Officer could not, in law rely on such statements. The Ld. AR drew our attention to the statements recorded on oath during survey operation (copy at pages 1-17 of Paper Book) and submitted that section 133A does not empower any ITO to examine any person on oath. In contra distinction to the power under section 133A of the Act, section 132(4) enables the authorised officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the Act. On the other hand whatever statement is recorded under section 133A is not given an evidentiary value. The statement obtained under section 133A would not be automatically binding upon the assesses. The Ld. AR relied upon the decision of Hon ble Madras High Court in CIT vs. Khader Khan Son (2008) 300 ITR 157 (Mad.) and the decision of Hon ble Delhi High Court in CIT vs. Dhingra Metal Works (2010) 328 ITR 384 (Delhi). He also referred to the letter dated 18.12.2014 of the CBDT [ F. No. 286/98/2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person who has made the admission to show that it is incorrect. 11. For the reasons aforesaid, we are of the view that the survey officer is vested with the power under section 133A(3)(iii) to record the statement of the assessee which may be useful for or relevant to any proceedings under the Act. But he is not authorised to administer oath. Since the survey officer had recorded the statement of the assessee and his wife on oath in the case under our consideration, we hold that the action of the survey officer was not in accordance with law. Consequently, such statement cannot be conclusive piece of evidence by itself and it is open to the assessee to show that the same was incorrect. Accordingly, both the additional grounds are decided in favour of the assessee. 12. We now proceed to consider the case of the assessee on merits. Survey under section 133A was conducted on 19.9.2007 and 20.9.2007 in the course of which the assessee in his statement recorded on oath surrendered excess stock of Rs. 56,71,600/-; excess cash of Rs. 9,78,800/-; and Rs. 8,50,000/- being investment in construction WIP. On 17.10.2007 i.e. within a month the assessee wrote to the CCIT (page 18-20 of P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing bankers cheque for Rs. 24,91,000/= being income-tax on the alleged surrender value of Rs. 75,00,400/= the remaining pages fro 9 to 12 containing Question No. 31 onwards were written very has between 11.30 A.M to 12.00 noon on 20-09-2007. The said surren value was arrived at without making any inventory of cash, stock or details of construction expenses and thus without any evidence regarding excess availability of cash, stock in hand or unexplained investments. The survey party decided to get the surrender of Rs. 75,00,400/= as detailed below: 1. Excess Stock Rs.56,71,600/- 2. Excess Cash Rs. 9,78,800/- 3. Investment in Rs. 8,50,000/- Construction work in Progress. Rs.75,00,400/- As the health condition of my father Sh. G.K. Agarwal, who is a Diabetic and Heart Patient, was not good, hence in order to get rid of this pressure I requested my nears and dears to help me at this juncture by providing financial help in a very short span of time to enable me to get a pay order from my bankers I procured cash from the persons as per list attached and deposited into bank for getting the pay order, thus there was no excess cash found at the premises. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vey team towards the amount of income tax on such alleged surrender. Under the facts and circumstances explained above I am not able to pay my full attention neither to my business activities nor to my health/father s health and family chores. In fact there is no fault on my part and I am a genuine and regular tax payer. Kindly drop the proceedings and refund the tax. Thanking you Yours faithful! Sd/- (Sandeep Kumax Mittal) Proprietor M/s. Sri Bankey Bihari Papers Cony with compliments to The Hon bles I Chief Commissioner of Income Tax-XII, New Delhi 2. Commissioner of Income Tax-XIILNew Delhi. 3. Additional Commissioner of Income Tax Range 39(1), New Delhi. 13. As regards the excess stock the assessee had replied to the question No. 36 that in order to purchase peace he surrendered the excess stock and in the letter of retraction, the assessee asserted that heavy paper reels weighed in average about 300 kgs 400 kgs per reel. The survey team had not taken reels of paper for weighment they did not have any equipment to verify the weight or value of stock. No physical inventory was ever prepared by the survey team and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, the penalty has been deleted by the Ld. CIT(A) (pages 80-91 of Paper Book) by accepting the explanation of the assessee that cash was collected in the morning of 20th September, 2007 by the assessee from his friends and relatives in order to get banker cheque for Rs. 24,91,600/- favouring DCIT Circle 39(1). It may, not be out of place to mention that the Revenue s appeal against the order (supra) of the Ld. CIT(A) stands dismissed by the Tribunal in ITA No. 5356/Del/2012 dated 30.09.2016. 14.2 The Ld. AO rejected the assessee s explanation merely relying on the statement of the assessee recorded during survey. In fact, except cash of Rs. 22,143/- no more cash was available with the assessee and the survey team erred in treating the funds arranged by the assessee for depositing tax as excess cash available with the assessee. The addition is not sustainable and is deleted. 15. Regarding the addition on account of investment in construction WIP, it was explained in the letter of retraction and during assessment proceedings that certain renovations were carried out in the year 2005-06 and the amount spent was duly reflected in the books of account. At the time of survey no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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