TMI Blog2005 (7) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... ned CIT(A), has erred in not affording an opportunity to the AO while accepting the additional evidence which is in violation of provisions of r. 46A of IT Rules. 3. In the cross-objections filed by the assessees, the following two identical grounds have been taken: 1. That the learned CIT(A) has erred in confirming the addition of Rs. 35,000 being 1/9th share of alleged investment in shares out of undisclosed sources. 2. That the learned CIT(A) has erred in not adjudicating the assessee's ground of appeal that the assessment framed is barred by limitation. 4. The facts of the cases common to all assessees are that these assessees had filed the returns of income in individual cases. The IT authorities had carried out survey action under s. 133A at the business premises of two firms on 7th Sept., 2000 in which family members of these assessees were partners. During the course of survey action certain loose sheets were found. The Revenue obtained the photocopies of the same. The partners of the firms, viz., Achuhat Poddar, vide letter dated nil stated to have been received on 7th Sept., 2000 disclosed on behalf of two firms income of Rs. 10 lakhs each and income of Rs. 10 lak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis of surmises and conjectures. The learned CIT(A) considered these submissions and accepted that there was no basis for making the addition of Rs. 1,64,000 each by relying on p. 4 of Annex. IV. He, therefore, deleted such addition made in all the cases. As regards addition of Rs. 35,000 each made by relying on p. 7 of Annex. IV, the learned CIT(A) upheld the addition by observing that the same was neither rough nor vague because some of these figures appearing in this paper are mentioned against specific individuals/concerns of the family membrs/concerns of Poddar family. The Revenue is aggrieved by orders of CIT(A) in deleting the additions of Rs. 1,64,000 in each of the cases and assessees are aggrieved by sustaining additions of Rs. 35,000 each in all these cases. Hence, these cross-appeals before me. 7. Arguing the appeals of the Revenue, learned Departmental Representative drew my attention to pp. 1 to 2 of paper book of the assessee which is a copy of assessee's surrender letter received on 7th Sept., 2000 whereby income of Rs. 10 lacs each was surrendered in the hands of two firms and income of Rs. 10 lacs was surrendered in the hands of 10 individual assessees. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and without any basis. He also submitted that assessments were made in complete absurdity without application of mind. He drew my attention to the relevant paragraphs of assessment orders where AO has repeatedly mentioned that survey action under s. 133A was carried out in these cases whereas such action was carried out only at the premises of firms. He further stated that AO had recorded that assessee had not maintained books of account. But subsequently recorded that books of account were produced and examined. He further submitted that income disclosed during survey was retracted as the surrender was made under duress. The learned CIT(A) has also upheld the contention of assessees that surrender was obtained under duress. He also stated that not even a single paise of unaccounted investment in property, bank, FDRs, NSCs, KVPs, IVPs, deposits, shares, etc. belonging to these 9 assessees was found during the course of survey. Same arguments were advanced in regard to common ground relating to COs filed by the assessees. He drew my attention to p. 7 of Annex. IV. He submitted that the names of Pragya Poddar, Achucht Poddar and Surya appear and down below is the name of Sun, i.e., S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. Therefore, the additions in the hands of assessees could not be made by relying on these disclosures. Now the basis of these additions are two loose papers at page Nos. 4 and 7 of Annex. IV found during the survey action at the premises of the firms. I have minutely examined these papers. None of the name of these assessees appears on these pages. Page NO.4 indicates the name at the top 'Sun' which is a partnership firm. If at all these entries are to be considered for addition, it could only be in the hands of firm whose name appeared and from whom the same was recovered. Similarly, p. 7 contains the names of Pragya, Achuhat, Surya and Sun. Surya Synthetics and Sun Synthetics are partnership firms. The names of these persons do not appear on this page also. It is also a fact that cash of Rs. 15,800 was found at the time of survey. Addition of Rs. 1.64,000 each has been made on the basis of cash available. Now the question arises whether the remaining cash was found either by way of entries in books or in reality. These entries do not show whether these were receipts, expenses, investment or unaccounted sales, purchases, etc. Therefore, there is no basis for making an addition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se papers did not indicate the name of assessee. Therefore, loose papers by themselves did not lead to any conclusion and had no evidentiary value. Thus, the sum and substance of these decisions is that entries found on the loose papers without indicating the name of assessee and the nature of entries could not by themselves form the basis of addition until there is some material and evidence on record to corroborate that these represent undisclosed/unaccounted income investment or expenditure. No such material has been placed on record in the present cases. In fact, the cases of these assessees stand/on stronger footing because these loose sheets were not recovered from the assessees and the names of these persons did not appear on the same. Therefore, the burden was on the Revenue to establish that these contained undisclosed cash/investment in their hands which Revenue has failed to do. 11. Before parting with, this issue, I would also like to refer to the income surrendered during the course of survey which was subsequently retracted and whether any addition could be made merely on the basis of such surrender. From the facts discussed above it is obvious that names of these a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e filed earlier. Clause 2 of Expln. 5 of s. 271(1)(c) confers certain benefits on the person who had made a statement under sub-s. (4) to s. 132 surrendering income which had not been disclosed in the return of income in the form of immunity from penalty under S. 271(1)(c) subject to his disclosing the manner in which such income was derived and the payment of tax and interest in respect of such income. Thus, the income surrendered during the course of recording of statement under s. 132(4) is also for the benefit of the assessee. Now the question arises as to whether the income surrendered during the course of recording of statement under s. 132(4) could be retracted, if there is no material to justify such disclosure. It is not in dispute that income disclosed under S. 132(4) was subsequently retracted by the assessees. It was also not disclosed in the returns of income filed. Based on the seized documents and material, the AO has computed total income, which is below the income disclosed under S. 132(4) of the IT Act. In fact all the additions made by the AO based on the documents and evidence found during the search stand confirmed. It is also a fact that total income so comput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht of detailed discussion in the preceding paragraphs and the legal position discussed above, I am of the considered opinion that the learned CIT(A) was not justified in sustaining the addition of Rs. 35,000 each in the hands of these assessees. However, the orders of CIT(A) in deleting the addition of Rs. 1,64,000 in the hands of these assessees do not warrant any interference. Accordingly, the orders of CIT(A) in regard to deletion of addition of Rs. 1,64,000 each in these cases are upheld and in regard to sustaining an addition of Rs. 35,000 each are set aside and addition made in all the cases is deleted. While the grounds of appeal of the Revenue in all these appeals is dismissed, the grounds of COs of the assessees is allowed. 13. The next common ground of appeal of Revenue in all the cases relates to accepting fresh evidence under r. 46A. Briefly stated, the facts are that on p. 4 of Annex. IV, there were two entries of Rs. 8,70,000 and 6,90,000. These were included by the AO in aggregate of Rs. 16,40,000 and thereafter allocated 1I1Oth to each for making an addition of Rs. 1,64,000 being cash available. During the course of appeal proceedings before CIT(A) , the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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