DCIT, New Delhi V. M/s ARN Infrastructure Ltd., New Delhi

ITA 1222/DEL/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3473 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 04-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R C D AN DE
• Keywords: Loose papers; Principle of natural justice; Assessment record
• Section: 133A; 132

Judgement Text

1 ITA NOS. 1206 & 1222/DEL/2013 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEM BER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER ITA NO. 1206/DEL/201 3 ( A.Y 2009-10) DCIT CIRCLE-2(1), ROOM NO. 398D, C. R. BUILDING NEW DELHI (APPELLANT) VS AMR INFRASTRUCTURE LTD. 2425/11, BEADONPURA, NEAR GURDUWARA ROAD, KAROL BAGH, NEW DELHI AAFCA8375E (RESPONDENT) ITA NO. 1222/DEL/201 3 ( A.Y 2009-10) DCIT CIRCLE-2(1), NEW DELHI (APPELLANT) VS ARN INFRASTRUCTURE LTD. 9, BIRLA HOUSE, ARYA SAMAJ ROAD KAROL BAGH, NEW DELHI AAFCA6403M (RESPONDENT) APPELLANT BY DR. RAKESH GUPTA, ADV, SH. ASHWANI TANEJA, FCA RESPONDENT BY SH. R. C. DANDE, SR. DR ORDER PER SUCHITRA KAMBLE, JM THESE APPEALS ARE FILED AGAINST THE ORDER DATED 19/ 1/2012 & 13/12/2012 BY CIT(A)-V, NEW DELHI IN ASSESSMENT YEA R 2009-10 RESPECTIVELY. 2. THE FACTS OF THESE TWO APPEALS ARE SIMILAR. THE REFORE, THESE TWO APPEALS ARE TAKEN UP TOGETHER. DATE OF HEARING 03.08.2017 DATE OF PRONOUNCEMENT 30.10.2017 2 ITA NOS. 1206 & 1222/DEL/2013 3. THE GROUNDS OF APPEAL ARE AS UNDER:- (ITA NO. 1 206/DEL/2013) 1. WHETHER THE LD.CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE ADDITION MADE BY THE A.O ON ACCOUNT OF UNEXPLAINED MONEY AMOUNTING TO RS.10,00,00,000/- IGNORING THE FACT THAT DURING THE SURVEY CARRIED OUT ON 20/11/2008 AT THE PREMISES OF THE ASSESSEE COMPANY, A LARGE NUMBER OF DOCUMENTS WERE IMPOUNDED, CLEANLY ESTABLISHING THAT THE ASSESSEE WAS RECEIVING MAJOR PORTION OF THE BOOKING AMOUNT IN CA SH AND AS SUCH WAS NOT DECLARING THE CORRECT INCOME IN THE TAX RETURN. (ITA NO. 1222/DEL/2013) 1. WHETHER THE LD.CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE ADDITION MADE BY THE A.O ON ACCOUNT OF UNEXPLAINED MONEY AMOUNTING TO RS.10,00,00,000/- IGNORING THE FACT THAT DURING THE SURVEY CARRIED OUT ON 20/11/2008 AT THE PREMISES OF THE ASSESSEE COMPANY, A LARGE NUMBER OF DOCUMENTS WERE IMPOUNDED, CLEANLY ESTABLISHING THAT THE ASSESSEE WAS RECEIVING MAJOR PORTION OF THE BOOKING AMOUNT IN CA SH AND AS SUCH WAS NOT DECLARING THE CORRECT INCOME IN THE TAX RETURN. 4. THE BRIEF FACTS OF THE CASE IN CASE OF M/S AMR I NFRASTRUCTURE LTD. IS AS FOLLOWS:- THE ASSESSEE IS A DEVELOPER & BUILDER AND WAS DEVEL OPING VARIOUS PROJECTS AT DIFFERENT CITES AND LOCATIONS OF NCR. IT HAD ENTERE D INTO VARIOUS AGREEMENTS WITH DIFFERENT COMPANIES FOR DEVELOPING THE RESIDEN TIAL AND COMMERCIAL PROPERTIES. IT HAS ALSO ENTERED INTO MEMORANDUM OF UNDERSTANDING WITH THE VARIOUS COMPANIES. IT HAD ENTERED INTO AN AGREEMENT DATED 30.06.2006(PG 18 TO 23 OF PB) WITH M/S REAL GAIN ESTATES (P) LTD., A S PER WHICH THE LATER WAS 3 ITA NOS. 1206 & 1222/DEL/2013 APPOINTED AS SOLE AND EXCLUSIVE AGENT TO SELL/BOOK THE PROJECT FOR WHICH THE APPELLANT WAS TO PAY 6.5% BROKERAGE TO M/S REAL GAI N ESTATES(P)LTD. ON EACH SALE/BOOKING OF UNITS IN THE SAID PROJECT. A SURVEY WAS CARRIED OUT ON ITS PREMISES ON 20.11.2008, A LARGE NUMBER OF DOCUMENTS WERE IMPOUNDED DURING SURVEY ALONGWITH COPIES OF MOUS WERE IMPOUND ED. STATEMENT OF ONE OF THE DIRECTORS OF THE ASSESSEE COMPANY, SH KRISHAN K UMAR, WAS RECORDED ON OATH DURING THE OPERATION U/S 133 A OF THE IT ACT. IN THE STATEMENT SHRI KRISHAN KUMAR IN REPLY TO QUESTION NO. 17 VOLUNTARI LY DISCLOSED ADDITIONAL INCOME TO THE EXTENT OF RS. 10 CRORES TO BUY PIECE OF MIND. THE RELEVANT QUESTION NO. 17 AND REPLY OF SHRI KRISHAN KUMAR ARE REPRODUCED AS UNDER: 'QUESTION:- 17. YOU HAVE BEEN SHOWN DOCUMENTS IMPOU NDED DURING THE COURSE OF SURVEY AT THE BUSINESS/OFFICE PREMISES OF M/S AMR INFRASTRUCTURE LTD. THESE DOCUMENTS HAVE ALSO BEEN SHOWN TO MR. R. C. SONI ANOTHER DIRECTOR OF THE COMPANY. HOW DO YOU EXPLAIN THE SAME AND WHA T YOU HAVE TO SAY IN THIS REGARD? ANS:-I HAVE SEEN THE DOCUMENTS IMPOUNDED AS PER ANN EXURE A-L TO A-13 & A- 15 FROM THE OFFICE PREMISES OF THE COMPANY. THESE H AVE ALSO BEEN DISCUSSED WITH MR. R.C. SONI ANOTHER DIRECTOR. I AM NOT IN A POSITION TO EXPLAIN THE SAME AT THIS POINT OF TIME. HOWEVER, TO BUY PIECE OF MIN D I DO HEREBY DECLARE AN ADDITIONAL INCOME AT RS. 10 CRORES TEN CRORES ONLY) AN BEHALF OF THE COMPANY FOR THE CURRENT FINANCIAL YEAR 2008- 09 RELEVANT TO THE ASSESSMENT YEAR 2009- 10. THIS OFFER HAS BEEN MADE ON ACCOUNT OF CASH PAY MENTS RECEIVED FOR SALE OF PLOTS/AREA WHICH HAVE NOT BEEN FULLY ACCOUNTED F OR IN THE REGULAR BOOKS OF ACCOUNT OF THE COMPANY. AMOUNT -AT EXPENDITURE HAS BEEN DEDUCTED OUT OF UNACCOUNTED CASH PAYMENTS RECEIVED. THIS INCOME HAS BEEN DECLARED VOLUNTARILY WITHOUT ANY PRESSURE, COERCION AND IS S UBJECT TO NO PENALTY U/S 271(1)(C) OF THE I.T. ACT, 1961. ADVANCE-TAX WILL B E PAID AS PER LAW. I HAVE READ OVER THE ABOVE STATEMENT AND FOUND IT C ORRECTLY RECORDED. THE STATEMENT HAS BEEN GIVEN BY ME WITHOUT ANY FEAR AND PRESSURE/COERCION.' 4 ITA NOS. 1206 & 1222/DEL/2013 STATEMENT OF OTHER DIRECTOR OF THE ASSESSEE COMPANY SH R.C. SONI WAS ALSO RECORDED ON THE DAY OF SURVEY AND SH. SONI HAD ALSO STATED THAT AS THE COMPANY WAS READY TO VOLUNTARILY DISCLOSURE OF RS. 10 CRORE, IT WAS REQUESTED NOT TO START ANY PENALTY PROCEEDINGS OR P ROSECUTIONS. BESIDES THE STATEMENTS OF THESE DIRECTORS RECORDED U/S 133A, A SPECIFIC LETTER DATED 21.11.2008 DULY SIGNED BY SH KRISHAN KUMAR'S WAS AL SO SUBMITTED THE CONTENTS OF WHICH ARE REPRODUCED AS UNDER: 'DURING THE COURSE OF SURVEY; CERTAIN LOOSE PAPERS AND DOCUMENTS AS PER ANNEXURE-A WERE IMPOUNDED WHICH WERE SHOWN TO M E. I HAVE SEEN THE DOCUMENTS IMPOUNDED AS PER ANNEXURE A-L TO A-13 AND A-15 FROM THE OFFICE PREMISES OF THE COMPANY. THESE HAVE ALSO BEEN DISCUSSED WITH SH. R.C. SONI', THE OTHER DIRECTOR. I AM NOT I N A POSITION TO EXPLAIN THE SAME AT THIS POINT OF TIME. HOWEVER TO BY PEACE OF MIND, I DO HEREBY DECLARE AN ADDITIONAL INCOME OF I 10 CRORES (RS.TEN CRORES ONLY) ON BEHALF OF THE COMPANY FOR THE CURRENT FINANCIAL YEA R 2008-09 RELEVANT TO THE ASSESSMENT YEAR 2009-10. THIS OFFER HAS BEEN MA DE ON ACCOUNT OF CASH PAYMENTS RECEIVED FOR SALE OF PLOTS/AREA WHICH HAVE NOT BEEN FULLY ACCOUNTED OR IN THE REGULAR BOOKS OF ACCOUNTS OF TH E COMPANY. AMOUNT OF EXPENDITURE INCURRED HAS BEEN DEDUCTED OUT OF UN ACCOUNTED CASH PAYMENTS RECEIVED. THIS INCOME HAS BEEN DECLARED VO LUNTARILY WITHOUT ANY PRESSURE, COERCION OR UNDUE INFLUENCE AND IS SU BJECT TO NO PENAL ACTION UNDER SECTION 271(1)1 OF THE INCOME TACT ACT , 1961. ADVANCE TAX WILL BE PAID AS PER LAW.' HOWEVER, IN THE RETURN FILED ON 30.9.2009 FOR THE A Y UNDER CONSIDERATION A LOSS OF RS.3,00,80,224/- ONLY WAS DECLARED AND TH E SURRENDER AMOUNT OF RS.10 CRORES WAS NOT INCLUDED THEREIN. AS PER PARA-4 OF THE ASSESSMENT ORDER, DURING ASSES SMENTS PROCEEDING, THE ASSESSEE WAS PROVIDED PHOTOCOPY OF SURVEY MATER IAL AND WAS ASKED TO FILE 5 ITA NOS. 1206 & 1222/DEL/2013 REPLIES TO THE QUESTIONNAIRE, WHICH AS PER THE ASSE SSMENT ORDER, WAS NOT REPLIED BY THE ASSESSEE, IN SPITE OF A NUMBER OF OP PORTUNITIES GIVEN BY THE AO. SINCE THE ASSESSMENT WAS GETTING BARRED BY LIMITATI ON ON 31.12.2011 THE AO COMPLETED THE ASSESSMENT ON 27.12.2011 RELYING SOLE LY ON THE SURVEY REPORT. THE ASSESSING OFFICER MADE ADDITION OF RS. 10 CRORE ON ACCOUNT OF UNEXPLAINED MONEY. 5. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) ALLOWED THE APPEAL OF THE A SSESSEE. THE ORDER OF THE CIT(A) AT PARA 10.1 READ AS UNDER:- 10. AS NOTED ABOVE IN PARA 9, THE ADDITION MADE BY THE A.O HAS BEEN DELETED AND THE GROUNDS OF APPEAL HAVE BEEN ALLOWED ; NOW SINCE THE A/R OF THE APPELLANT HAS MADE ALTERNATE ARGUMENTS THE SAME ARE ALSO CONSIDERED AS UNDER: (A) THE BOOKS OF ACCOUNTS WERE PRODUCED BEFORE THE AO AND THE AO HAS NOT BEEN ABLE TO POINT OUT ANY DEFICIENCY THEREIN. THE APPELLANT HAS SUBMITTED THAT IT HAD RECEIVED RS. 12 CRORES AFTER THE DATE O F SURVEY TILL 31.3.2009 AND THE AO HAS NOT POINTED OUT ANY DISCREPANCY IN THE P OST SURVEY RECEIPTS SHOWN BY THE APPELLANT. IT HAS FURTHER BEEN SUBMITT ED THAT EVEN IN THE PRE- SURVEY RECEIPTS THE AO HAS NOT QUESTIONED THE FIGUR E OF RECEIPTS SHOWN BY THE APPELLANT. THE UNDERSIGNED IS IN AGREEMENT WITH THI S VERSION OF THE APPELLANT. (B) FROM THE FINAL ACCOUNTS SUBMITTED DURING APPEAL PRO CEEDINGS, IT HAS BEEN SEEN THAT THE TOTAL ADVANCE BOOKING RECEIPTS RECEIV ED TILL THE PREVIOUS YEAR ENDING 31.3.2008 WERE T 1,54,14,97,991.76 WHICH HAV E BEEN SHOWN UNDER THE HEAD CURRENT LIABILITIES IN SCHEDULE-J OF THE B ALANCE SHEET AS AT 31.3.2008; IN THE PREVIOUS YEAR ENDING 31.3.2007 SU CH RECEIPTS WERE RS. 95,43,64,480.12 AND WERE GIVEN SIMILAR TREATMENT IN THE ACCOUNTS I.E. THESE WERE ALSO SHOWN AS CURRENT LIABILITY. IN THE PROFIT & LOSS A/C THE ONLY INCOME 6 ITA NOS. 1206 & 1222/DEL/2013 SHOWN FOR THE YEAR ENDING 31.3.2008 IS OTHER INCOME OF RS.1,62,35,604.88 WHICH HAS BEEN SHOWN IN SCHEDULE-K AS BANK INTEREST ON FDR INCLUDING PROFIT ON SALE OF CAR AT RS. 83,643/-; IT SHOWS THAT THERE HAS BEEN NO INCOME SHOWN FROM THE BUSINESS ACTIVITY OF THE APPELLANT; SAME I S THE POSITION WITH REGARD TO YEAR ENDING 31.3.2007. AS REGARDS, THE PREVIOUS YEAR ENDING 31.3.2009 RELE VANT FOR THE AY 2009- 10, THERE IS NO CHANGE IN THE METHOD BEING FOLLOWED I.E . AMOUNTS RECEIVED ON ACCOUNT OF ADVANCE BOOKING WERE SHOWN AS LIABILITY IN SCHEDULE-I AT RS. 2,15,07,28,058.83 AND THE ONLY INCOME SHOWN IN SCHE DULE-J IS BANK INTEREST ON FDR AT RS. 1,02,91,650.58. IN THE PROFIT & LOSS A/C THE SALES SHOWN AT RS. 3,00,00,000/- ARE FROM SALE OF PROPERTY AND ARE NOT SALES FROM THE PROJECT. EXPENDITURE ON CONSTRUCTION/BUILDING ACTIVITY HAS B EEN SHOWN AS WORK-IN- PROGRESS IN THE BALANCE SHEET OF ALL THE THREE YEAR S AS AT 31/3/2007, 31/3/2008 & 31/3/2009 UNDER THE HEAD CURRENT ASSETS . THE PURPOSE OF NARRATING THE AFORESAID IS TO CONFIR M THAT THE APPELLANT IS FOLLOWING THE PROJECT COMPLETION METHOD. (B) IN NORMAL CIRCUMSTANCES, CASH IF ANY, RECEIVED BUT NOT SHOWN BY THE APPELLANT IN ITS BOOKS OF ACCOUNTS, IF DETECTED BY THE DEPARTMENT HAS TO BE TAKEN IN ITS RECEIPTS; BUT IN THE STATEMENT RECORDE D DURING SURVEY, -EPRODUCED ABOVE, SHRI KRISHAN KUMAR HAS UNAMBIGUOUSLY CONVEYE D THAT HE WAS SURRENDERING RS. 10 CRORES ON ACCOUNT OF CASH RECEI PTS RECEIVED FROM CASH BOOKINGS AFTER DEDUCTING UNACCOUNTED CASH EXPENSE I N THE CURRENT FINANCIAL YEAR I.E. FY 2008-09 AND FURTHER THAT HE HAD OFFERE D THIS ADDITIONAL INCOME OF RS. 10 CRORES TO BUY PEACE OF MIND. THAT STATEMENT DOES NOT HAVE ANY EVIDENTIARY VALUE AS OBSERVED ABOVE AFTER DETAILED DISCUSSION FROM LEGAL AS WELL AS FACTUAL ASPECTS; IT HAS ALSO BEEN OBSERVED THAT THE APPELLANT IS FOLLOWING PROJECT COMPLETION METHOD FOR SHOWING ITS PROFITS. 7 ITA NOS. 1206 & 1222/DEL/2013 SUCH BEING THE POSITION, EVEN ON THIS PLEA ALSO TH E ADDITION MADE BY THE AO DESERVES TO BE DELETED. 6. THE LD. DR SUBMITTED THAT THE SURVEY WAS CARRIED OUT ON 20.11.2009 AT THE PREMISES OF THE ASSESSEE COMPANY. LARGE NUMBER OF DOCUMENTS WERE IMPOUNDED DURING THE SURVEY CLEARLY ESTABLISHING TH AT THE ASSESSEE WAS RECEIVING MAJOR PORTION OF THE BOOKING AMOUNT IN CA SH AND AS SUCH WAS NOT DECLARING THE CORRECT INCOME IN THE TAX RETURN. A S URRENDER OF INCOME OF RS. TEN CRORES WAS MADE VOLUNTARILY BY THE ASSESSEE COMPANY DURING THE COURSE OF THE SURVEY. HOWEVER, THE ASSESSEE BACKTRACKED AND WHILE FILING THE TAX RETURN DID NOT OFFER THIS SURRENDERED AMOUNT TO TAX. THE LD. D R RELIED UPON THE HONBLE DELHI HIGH COURT JUDGMENT IN CASE OF BHAGIRATH AGGA RWAL VS. CIT 351 ITR 143 WHEREIN IT IS HELD THAT AN ADDITION IN ASSESSEES I NCOME RELYING ON STATEMENTS RECORDED DURING THE SEARCH OPERATIONS CANNOT BE DEL ETED WITHOUT PROVING STATEMENTS TO BE INCORRECT. IN CASE OF RAJ HANS TOW ERS(P) LTD. VS. CIT 373 ITR 9, THE HONBLE DELHI HIGH COURT HELD THAT WHERE THE ASSESSEE HAD NOT OFFERED ANY SATISFACTORY EXPLANATION REGARDING SURRENDER AM OUNT BEING NOT BONA FIDE AND IT WAS NOT BORNE OUT IN ANY CONTENTIONS RAISED BEFORE LOWER AUTHORITIES, ADDITIONS SO MADE AFTER ADJUSTING EXPENDITURE WERE JUSTIFIED. THE LD. DR FURTHER RELIED UPON THE JUDGMENT OF SMT. DAYAWANTI VS. CIT 390 ITR 496 WHEREIN IT IS HELD THAT WHERE INFERENCES DRAWN IN R ESPECT OF UNDECLARED INCOME OF THE ASSESSEE WERE PREMISED ON MATERIALS FOUND AS WELL AS STATEMENTS RECORDED BY ASSESSEES SON IN COURSE OF SEARCH OPER ATIONS AND ASSESSEE HAD NOT BEEN ABLE TO SHOW AS TO HOW ESTIMATION MADE BY AO WAS ARBITRARY OR UNREASONABLE, ADDITIONS SO MADE BY ASSESSING OFFICE R BY REJECTING BOOKS OF ACCOUNT WAS JUSTIFIED. 7. THE LD. AR RELIED UPON THE ORDER OF THE CIT(A) A ND SUBMITTED THAT THE SURVEY HAD TAKEN PLACE AT THE PREMISES OF ASSESSEE AND ITS SELLING AGENT NAMELY M/S. REAL GAIN ESTATE PVT. LTD. STATEMENT OF ONE OF THE DIRECTORS 8 ITA NOS. 1206 & 1222/DEL/2013 NAMELY SH. KRISHEN KUMAR (IN AMR INFRASTRUCTURE LTD .) AND SH. NITIN REKHAN (IN ARN INFRASTRUCTURE LTD.) WAS RECORDED U/S 133A WHEREIN HE DECLARED ADDITIONAL INCOME OF RS. 10 CRORES WITH A VIEW TO B UY PEACE OF MIND. HOWEVER, IN THE RETURN FILED BY THE ASSESSEE COMPANY, THIS I NCOME WAS NOT ADDED AND THUS IMPLIEDLY THE AFORESAID STATEMENT WAS RETRACTE D, BUT THE AO DID NOT ACCEPT THE STAND OF ASSESSEE AND MADE THE ADDITION ON THE GROUND THAT OFFER WAS MADE IN VIEW OF DOCUMENTS FOUND SHOWING THAT AS SESSEE RECEIVED CASH PAYMENT WHICH WAS NOT FULLY ACCOUNTED FOR IN REGULA R BOOKS OF ACCOUNTS OF THE COMPANY. THE AO DID NOT REJECT THE BOOKS OF ACCOUNT OF THE ASSESSEE. THEREFORE, THE CIT(A) HAS RIGHTLY DELETED THE ADDIT IONS MADE. ON MERIT ALSO THE ASSESSEE HAD GOOD CASE WHICH WAS TAKEN INTO CONSIDE RATION BY THE CIT(A). 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS. THE CONTENTIONS OF THE LD. DR THAT THE STATEMENT OF THE DIRECTORS OF THE ASSESSEE SHOULD HAVE BEEN TAKEN INTO CONSIDERATION BY THE CI T(A) AND THE ADDITION OF THE UNDISCLOSED INCOME WAS JUSTIFIED BY THE ASSESSE E. THIS CONTENTION CAN NOT HAVE A SUPPORT UNLESS AND UNTIL THE SUPPORTIVE DOCU MENTS WERE TAKEN INTO CONGNIZANCE BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS NOT TAKEN ANY EFFORTS TO VERIFY THE STATEMENTS OF THE DIRECTORS F ROM THE RECORD. THE CIT(A) HAS RIGHTLY DELETED THE ADDITIONS BY TAKING INTO CONSID ERATION ALL THE ASPECTS OF STATEMENTS AS WELL AS THE DOCUMENTS PRODUCED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. THE EXTRACTS OF THE CIT(A) ORDER AS FOLLOWS (FROM PAGES 41 TO 49 OF CIT(A) ORDER): THE VERSION OF THE AO AND OF THE APPELLANT IS CON SIDERED IN THE FOLLOWING PARAS WHILE DECIDING THE ISSUES RAISED IN THE GROUN DS OF APPEAL:- (I) FROM THE FACTS NOTED ABOVE, IT IS CLEAR THAT T HE STATEMENT (PG 24 TO 34 OF PB) OF SHRI KRISHAN KUMAR WAS RECORDED UNDER OATH DURING SURVEY OPERATION AND THE SURRENDER MADE IN THAT STATEMENT, IN REPLY TO QUESTION NO. 17 OF THE 9 ITA NOS. 1206 & 1222/DEL/2013 STATEMENT; WAS USED FOR MAKING AN ADDITION OF 10 C RORES BY THE SETTLED LEGAL PROPOSITION THAT A STATEMENT RECORDED DURING SURVEY DOES NOT HAVE ANY EVIDENTIARY VALUE UNLESS IT IS SUPPORTED BY CORROBO RATED EVIDENCE. THE SURRENDER MADE DURING SURVEY DOES NOT HAVE ANY VALU E UNLESS THE ASSESSING OFFICER GIVES SPECIFIC FINDING AS TO THE EVIDENCE I N THIS REGARD. IT MAY FURTHER BE NOTED THAT THERE IS A DIFFERENCE BETWEEN THE STA TEMENT RECORDED U/S 133A AND SEC. 132(4); THE STATEMENT UNDER THE LATTER SEC TION IS UNDER OATH BUT UNDER THE FORMER SECTION IT IS NOT UNDER OATH; THIS IS BECAUSE THE OFFICERS U/S 133A ARE NOT AUTHORIZED TO TAKE STATEMENT UNDER OAT H. IN THIS REGARD, A REFERENCE IS BEING MADE TO THE JUDGEMENT OF HON'BLE HIGH COURT OF MADRAS IN THE CASE OF CIT V/S S KADER KHAN & SONS 300 ITR 157 IN WHICH THE HON'BLE HIGH COURT, AFTER DISCUSSING SEC.L33A & 132(4). . ..IN VIEW OF THE ABOVE LEGAL POSITION, THE AO'S B LINDLY FOLLOWING THE STATEMENT RECORDED DURING SURVEY AND MAKING THE ADD ITION ON THE BASIS OF SURRENDER IS NOT IN ORDER. II) THE APPELLANT HAS SUBMITTED THAT THE STATEMENT OF SHRI SHRI KRISHAN KUMAR WAS RECORDED UNDER DURESS-THE SURVEY STARTED ON 20. 11.2008 AND ENDED ON 21.11.2008(PAGE-24 & 32 OF THE PAPER BOOK). ATTENTI ON HAS BEEN DRAWN TO THE JUDGEMENT IN THE CASE OF KAILASHBEN MANOHARLAL CHOK SI V/S CIT(2008) 174 TAXMAN 466 WHEREIN THE HON'BLE GUJRAT HIGH COURT HA S HELD THAT 'STATEMENT RECORDED U/S 132(4) AT MIDNIGHT DURING SEARCH OPERA TION IS NOT VOLUNTARY STATEMENT, IT MAY NOT BE ENUMERATED AT THE TIME OF ASSESSMENT AFTER SEARCH'. AS PER THE APPELLANT THE POSITION IS WORSE U/S 133A WHICH IS NOT HAVING ANY EVIDENTIARY VALUE AS SUCH THEREFORE, THE STATEMENT RECORDED UNDER DURESS/STRESS/EXHAUSTION IS NOT A VOLUNTARY STATEME NT. THE A.OS VERSION IS THAT IT IS NOT MATERIAL BECAU SE IN THE ABSENCE OF COOPERATION BY THE PARTY THE SURVEY WOULD CONTINUE; TO WHICH THE APPELLANT HAS STATED THAT IT IS NOT BACKED BY EVIDENCE THAT T HE APPELLANT HAD NOT COOPERATED DURING THE SURVEY OPERATION. 10 ITA NOS. 1206 & 1222/DEL/2013 THE VERSION OF THE AO AND OF THE APPELLANT HAVE BEE N CONSIDERED CAREFULLY. NORMALLY, WHEN A SURVEY OPERATION IS STARTED AS PER RULES, IT CONTINUES TILL THE OPERATION IS COMPLETED. MERELY, BECAUSE THE SURVEY CONTINUED TILL THE NEXT DAY WOULD NOT MAKE THE STATEMENT RECORDED UNDER DURESS; HOWEVER, A PERSON IS NORMALLY UNDER STRESS WHEN A SURVEY PARTY OR A SEAR CH PARTY OF THE INCOME- TAX DEPARTMENT VISITS ITS OFFICE/HOUSE AND REMAINS THERE FOR SUCH A LONG PERIOD. BESIDES THIS, THE SUBSEQUENT FINDING/RESULT S: (A) THE AO'S FINDING NO DISCREPANCY IN THE BOOKS OF AC COUNTS; AND (B) HIS FAILURE TO BRING ANY CIRCUMSTANTIAL EVIDENCE O N RECORD TO SHOW THAT CASH WAS RECEIVED TO THE EXTENT OF ( 10 CRORES SURRENDER ED BY SHRI KRISHAN KUMAR; LEAD TO THE CONCLUSION THAT THE STATEMENT WAS GIVEN UNDER STRESS- (I) THE AO IS A QUASI JUDICIAL AUTHORITY; SHOULD APPLY HIS OWN MIND AT THE TIME OF REACHING CONCLUSIONS, THE AO HAS NOT APPLIED HIS MI ND IN THIS CASE; HE HAS NOT BROUGHT ANYTHING ON RECORD, EVEN CIRCUMSTANTIAL EVIDENCE, TO SHOW THAT THE APPELLANT HAD RECEIVED CASH IN ADDITION TO THE DECLARED AMOUNT. MORE SO, WHEN M/S REAL GAIN WERE ASSIGNED THE TASK OF BOOKIN G THE SPACE/PROPERTY AS PER AGREEMENT DATED 30.06.2006(PAGE 18 TO 23 OF THE PAPER BOOK). (II) THE AO HAS NOT BOTHERED TO FOLLOW THE INSTRUCTION OF THE CBDT DATED 10.3.2003. THE HON'BLE HIGH COURT OF MADRAS IN ITS JUDGEMENT IN THE CASE OF CIT V/S S KADER KHAN & SONS 300 ITR 157 NOTED ABOVE HAS TAKEN A SERIOUS VIEW OF THE IGNORING OF THIS INSTRUCTION BY THE A.O .NO CORROBORATIVE EVIDENCE WHILE MAKING THE ADDIT ION HAS BEEN BROUGHT ON RECORD. THERE IS NOT EVEN A WHISPER OF R ECORDING MADE IN THE 11 ITA NOS. 1206 & 1222/DEL/2013 PAPERS IMPOUNDED DURING SURVEY; THIS IS CLEARLY AGA INST THE SPIRIT OF INSTRUCTION DATED 10.03.2003 ISSUED BY THE BOARD. (V) THE UNDERSIGNED HAS SEEN THE ASSESSMENT RECORD AND HAS ALSO PERUSED THE RECORD OF ASSESSMENT PROCEEDINGS(NOTE-SHEETS). THE AO HAS NOTED ON 21.12.2011 THAT 'REQUISITE REPLY FURNISHED AND PLAC ED ON RECORD. BOOKS OF C/CS PRODUCED AND EXAMINED BY TEST CHECK. CASE DISC USSED; SUCH BEING THE NOTING MADE BY THE AO ON 21.12.2011 HIS OBSERVATION IN PARA 8 OF THE ASSESSMENT ORDER, THAT INFORMATION PROVIDED BY THE APPELLANT IS NEITHER COMPLETE NOR CONCLUSIVE, IS ILL FOUNDED RATHER IT I S CONTRADICTORY. THE AO HAS NOT POINTED OUT ANY INFORMATION ASKED BY IT, BUT NO T PROVIDED BY THE APPELLANT. THE AO'S BRUSHING ASIDE THE INFORMATION COLLECTED/RECORD IMPOUNDED DURING SURVEY IS NOT IN ORDER. THE AO HAS BLINDLY FOLLOWED THE SURVEY REPORT AND THE SURRENDER MADE BY THE APPELLA NT. (VI) THERE IS NO DISPUTE AS TO THE FACT THAT THE SU RVEY REPORT WAS NOT CONFRONTED TO THE APPELLANT BEFORE THIS BEING USED AGAINST THE APPELLANT. THE AO HAS HIMSELF ACCEPTED IN THE REMAND REPORT THAT I T IS INTERNAL ARRANGEMENT BETWEEN TWO OFFICIALS REGARDING CONFIDENTIAL CORRES PONDENCE AND THE ASSESSEE IS NOT SUPPOSED TO KNOW EVERYTHING REGARDING THE CO RRESPONDENCE BETWEEN TWO OFFICIALS BEING INFORMATIVE AND CONFIDENTIAL. T HE VERSION OF THE AO IS PULPABLY WRONG; A QUASI JUDICIAL AUTHORITY IS DUTY BOUND TO FOLLOW THE CARDINAL PRINCIPLES OF NATURAL JUSTICE I.E. NO DOCUMENT CAN BE USED AGAINST ANY PERSON UNLESS THAT PERSON IS GIVEN REASONABLE OPPORTUNITY TO SUBMIT HIS VERSION THEREON. CORRESPONDENCE BETWEEN OFFICERS OF THE DIR ECTORATE OF INVESTIGATION AND AN AOIS NOT A 'PRIVILEGED CORRESPONDENCE'; AT T HE STAGE OF ASSESSMENT PROCEEDINGS WHEN ACTUAL OPERATION U/S 133A OR 132 O F THE INCOME-TAX ACT HAS ALREADY TAKEN PLACE; IT HAS TO BE CONFRONTED TO AN ASSESSEE FOR ITS COMMENTS/VERSION BEFORE BEING USED AGAINST THE ASSE SSEE IN THE ASST, ORDER. SIMILAR VIEWS HAVE BEEN EXPRESSED BY THE HON'BLE SU PREME COURT IN THE CASE 12 ITA NOS. 1206 & 1222/DEL/2013 OF KISHANCHAND CHELLARAM V/S COMMISSIONER OF INCOME -TAX, BOMBAY CITY II125 ITR 713. FURTHER, THE FULL BENCH OF THE HON'B LE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF J.T.(INDIA)EXPORTS & ANOTHE R V/S UNION OF INDIA AND ANOTHER, 262 ITR 269 HAS OBSERVED: 'HOW THEN HAVE THE PRINCIPLES OF NATURAL JUSTICE BE EN INTERPRETED IN THE COURTS AND WITHIN WHAT LIMITS ARE THEY TO BE CONFINED? OVE R THE YEARS BY A PROCESS OF JUDICIAL INTERPRETATION TWO RULES HAVE BEEN EVOL VED AS REPRESENTING THE PRINCIPLES OF NATURAL JUSTICE IN JUDICIAL PROCESS, INCLUDING THEIR QUASI JUDICIAL AND ADMINISTRATIVE PROCESS. THEY CONSTITUTE THE BAS IC ELEMENTS OF FAIR HEARING, HAVING THEIR ROOTS IN THE INNATE SENSE OF MAN FOR FAIRPLAY 'AND JUSTICE WHICH IS NOT THE PRESERVE OF ANY PARTICULAR RACE OR COUNTRY BUT IS SHARED IN COMMON BY ALL MEN. THE FIRST RULE IS NEMO JUDEX IN CAUSA SUA' OR NEMO DEBET ESSE JUDEX IN PROPRIA CAUSA SUA 1 AS STATED IN [1605] 12 CO. REP. 114, THAT IS, 'NO MAN SHALL BE A JUDGE IN HIS OWN CAUSE'. COKE US ED THE FORM 'ALIQUIS NON DEBET ESSE JUDEX IN PROPRIA CAUSA QUIA NON POTEST E SSE JUDEX ET PARS' (CO. LITT. 141 A), THAT IS, 'NO MAN OUGHT TO BE A JUDGE IN HIS OWN CAUSE, BECAUSE HE CANNOT ACT AS JUDGE AND AT THE SAME TIME BE A PARTY '. THE FORM 'NEMO POTEST ESSE SIMUL ACTOR ET JUDEX', THAT IS, 'NO ONE CAN BE AT ONCE SUITOR AND JUDGE' IS ALSO AT TIMES USED. THE SECOND RULE AND THAT IS THE RULE WITH WHICH WE ARE CONCERNED IN THIS CASE IS 'AUDI ALTERAM PARTEM', TH AT IS, 'HEAR THE OTHER SIDE'. AT TIMES AND PARTICULARLY IN CONTINENTAL COUNTRIES, THE FORM 'AUDIETUR AT ALTERA PARS' IS USED, MEANING VERY MUCH THE SAME THING. A COROLLARY HAS BEEN DEDUCED FROM THE ABOVE TWO RULES AND PARTICULARLY T HE AUDI ALTERAM PARTEM RULE, NAMELY, 'QUI ALIQUID STATUERIT PARTE INAUDITA ALTERA, AEQUAM LICET, DEXERIT, HAUD AEQUUM FACERIT', THAT IS, 'HE WHO SHALL DECIDE ANYTHING WITHOUT THE OTHER SIDE HAVING BEEN HEARD, ALTHOUGH HE MAY HAVE SAID WHAT IS RIGHT, WILL NOT HAVE BEEN WHAT IS RIGHT' OR IN OTHER WORDS, AS IT IS NOW EXPRESSED, 'JUSTICE SHOULD NOT ONLY BE DONE BUT SHOULD MANIFESTLY BE SE EN TO BE DONE'. EVEN IF GRANT OF AN OPPORTUNITY IS NOT SPECIFICALLY PROVIDED FOR IT HAS TO BE READ 13 ITA NOS. 1206 & 1222/DEL/2013 INTO THE UNOCCUPIED INTERSTICES AND UNLESS SPECIFIC ALLY EXCLUDED THE PRINCIPLES OF NATURAL JUSTICE HAVE TO BE APPLIED. EVEN IF A ST ATUTE IS SILENT AND THERE ARE NO POSITIVE WORDS IN THE ACT OR RULES SPELLING OUT THE NEED TO HEAR THE PARTY WHOSE RIGHTS AND INTERESTS ARE LIKELY TO BE AFFECTE D, THE REQUIREMENT TO FOLLOW FAIR PROCEDURE BEFORE TAKING A DECISION MUST BE REA D INTO THE STATUTE, UNLESS THE STATUTE PROVIDES OTHERWISE'. SINCE THE SURVEY REPORT WAS NOT CONFRONTED TO THE A PPELLANT, BUT WAS USED BY THE AO, THE ASST, ORDER FRAMED ON THAT BASIS IS BAD IN LAW. 9. IN VIEW OF THE ABOVE DISCUSSION, THE ADDITION OF RS.10 CRORES MADE BY THE A.O IS DELETED AND THE GROUNDS OF APPEAL ARE ALLOWE D. THUS, THE CIT(A) HAS IN DETAIL CONSIDERED NOT ONLY ASSESSEES GROUNDS BUT ALSO THE COMMENTS OFFERED BY THE ASSESSING OFFICER WHILE DEALING THE REMAND REPORT BEFORE HIM IN DETAILS. THERE IS NO NEED TO I NTEREFERE WITH THE ORDER OF THE CIT(A). THUS, THE APPEALS OF REVENUE IN BOTH THE CA SES WHICH ARE IDENTICAL IN NATURE ARE DISMISSED. 9. IN RESULT, BOTH THE APPEALS OF THE REVENUE ARE D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH OCTOBER, 2017 . SD/ - SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 30/10/2017 R. NAHEED * COPY FORWARDED TO: 14 ITA NOS. 1206 & 1222/DEL/2013 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 7/08/2017 PS 2. DRAFT PLACED BEFORE AUTHOR 7/08/2017 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2017 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 30.10.2017 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 3 0 .10.2017 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. 15 ITA NOS. 1206 & 1222/DEL/2013