M/S COMPUCOM TECHONOLOGIES PVT.LT., Jaipur V. ACIT, Jaipur

ITA 1228/JPR/2010

• Counselvise Citation: 122823114 RSA 2010
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 04-10-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 15-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD JOHRI
• Keywords: Capital asset; Business income; Search and seizure; Retraction; Revised return
• Section: 133A; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO. 1228/ JP/2010 ASSESSMENT YEAR 2007-08 PAN: AAACC 9723 H M/S. COMPUCOM TECHNOLOGIES (P) LTD VS. THE ACIT 5A, TILAK BHAWAN, TILAK MARG CIRCLE- 6 C-SCHEME, JAIPUR JAIPUR (APPELLANT ) (RESPONDENT) ITA NO. 1229/ JP/2010 ASSESSMENT YEAR 2007-08 PAN: AAACC 9723 H THE DCIT VS. M/S. COMPUCOM TECHNOLOGIES (P) LTD CIRCLE- 6 5A, TILAK BHAWAN, TILAK MARG JAIPUR C-SCHEME, JAIPUR (APPELLANT ) (RESPONDENT ASSESSEE BY: SHRI RAJEEV SOGANI DEPARTMENT BY :SHRI VINOD JOHRI DATE OF HEARING: 04-10-2011 DATE OF PRONOUNCEMENT:14-10-2011 ORDER PER N.L. KALRA, AM:- THE ASSESSEE AS WELL HAS THE REV FILED APPEALS A GAINST THE ORDER OF THE LD. CIT(A)-II, JAIPUR DATED 12-08-2010 FOR T HE ASSESSMENT YEAR 2007- 08. 2 2.1 FIRST , WE TAKE UP THE APPEAL OF THE ASSESSEE A ND THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS AS UNDER:- IN THE FACT AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ACTI ON OF THE AO IN ADDING A SUM OF RS. 60,38,900/- AS UNDISCLOSED INCOME ALLEGEDLY ON ACCOUNT OF CASH PAYMENT MADE FOR PURCHASE OF LAND. THE ACTION OF TH E LD.CIT(A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AG AINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY DELETING THE SAID ADDITION OF RS. 60,39,900/- 2.2 THE AO IN HIS ORDER HAS MENTIONED AS UNDER:- FURTHER DURING THE COURSE OF SURVEY CONDUCTED ON 14- 09-2009 STATEMENT OF THE DIRECTOR, SHRI SURENDRA KU MAR SURANA WAS RECORDED. THE RELEVANT QUESTION AND THE ANSWER GIVE TO THE SAME READS AS UNDER: DURING THE COURSE OF SURVEY OF M/S COMPUCOM SOFTWARE LTD. SOME INCRIMINATING DOCUMENTS HAVE BEE N FOUND WHICH HAVE BEEN ANNEXED AS ANNEXURE A PAGE NO . 2,3 & 4 OF THE SAME ARE BEING SHOWN TO YOU WHICH IS AN AGREEMENT TO SALE. THE AGREEMENT HAS BEEN EXECUTED THROUGH SHRI PRANAY KUMAR GAUR RESIDENT OF 233-234, HIMMAT NAGAR, TONK ROAD , JAIPUR. AS PER THE AGREEMENT PLOT NO. C- 92, C-93 ,C-31 7C -32 AT THE PRIVATE KHATEDAR SCHEME SHRI NARSHING ARCODE, CHA K KAROL, JDA SCHEME, KE PASS CHATERPURA TEHSIL SANGANER AND IN RESPECT OF PLOT NO. 108 PRIVATE KHATEDAR SCHEME SBBJ STAFF AVASYA YOJANA, TARAKNAGAR , VILLAGE JAIPUR HAVE BEEN PURCHASED. BEHIND PAGE IT IS WRITTEN AS UNDER: 3 RECEIVED RS. 67,25,000/- (SIXTY SEVEN LAKH TWENTY FIVE THOUSAND ONLY) FOR THE TOTAL AMOUNT ALL FILES GIVEN. BALANCE RS.9,50,000/- 15-03-07 RS. 6,80,000/- BALANCE RS. 2,70,000/- ON PAGE 3 IT IS WRITTEN THAT THE TOTAL VALUE OF THE AGREEMENT IS RS. 76,73,940/- WHICH IS CALCULATED & @4500/- PER SQ. YARD. OUT OF THIS ON 12-03-2007 & 15-03-200 7 YOU HAVE PAID RS. 74,05,000/-. PLEASE STATE THE SOURCE OF INVESTMENT THEREIN. ANS. IT IS TRUE THAT IN MARCH 2007 TOWARDS PURCHASE S OF PLOT BEARING NO. C-108, C92, C-93, C-31 & C-32 A SU M OF RS 7405000/- WAS PAID. THIS AMOUNT WAS PAID THROUGH TH E FOLLOWING COMPANIES: I. SAMBHAR INFOTECH (P) LTD . (PLOT C-108) 2,14,500/- II. PALS INFOWALY PVT. LTD. (PLOT C-92) 2,13,300/- III. SAMBHAV INFOTECH PVT. LTD. (PLOT C-92) 2,13,300/- IV. COMPUCOMTECH.(P) LTD.(PLOT (-31) &(-32) 7,25,000/- 13,66,100/- BESIDES CASH OF RS. 13,66,100/- DETAILED ABOVE BALA NCE AMOUNT OF RS. 60,38,900/- HAS BEEN PAID IN CASH. TH IS CASH PAYMENT REPRESENTS THE UNDISCLOSED INCOME OF M/S CO MPUCOM TECHNOLOGIES PVT. LTD. FOR THE A.Y. 2007-08. THIS U NDISCLOSED INCOME OF RS.60,38,900/- HAS NOT BEEN SHOWN IN A.Y. 2007-08. THEREFORE, I PURPOSED TO REVISED RETURN OF INCOME I N RESPECT OF M/S COMPUCOM TECHNOLOGIES PVT. LTD. AFTER DISCLOSIN G THIS UNDISCLOSED INCOME. A SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE 16-1 2- 2009. IT WAS PROPOSED THEREIN TO MAKE AN ADDITION O N ACCOUNT OF UNDISCLOSED INCOME, ON ACCOUNT OF ABOVE CASH PAY MENT FOR PURCHASE OF LAND. THE REPLY OF THE ASSESSEE IN THE FORM OF AN AFFIDAVIT AND LETTER DATED 21-12-2006 READS AS UNDE R:- 4 BEFORE THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 6, JAIPUR AFFIDAVIT I, SURENDER KUMAR SURANA SON OF SHRI SHUBKARAN SURA NA AGED 46 YEARS RESIDENT OF C-117, JANPATH, LAL KOTHI SCH EME., JAIPUR, DO HEREBY DECLARE ON OATH AS UNDER:- 1. THAT I AM DIRECTOR IN COMPUCOM TECHNOLOGIES PVT. LT D. AND COMPUCOM SOFTWARE LTD. 2. THAT COMPUCOM TECHNOLOGIES PVT. LTD. AND COMPUCOM S OFTWARE LTD. ARE REGULARLY ASSESSED TO TAX AND THEIR PERMAN ENT ACCOUNT NUMBERS ARE AAACC9723H AND AAACG5818P. 3. THAT ON 14 TH OF SEPTEMBER, 2009 AT AROUND 2.00 PM ABOUT 12-13 PERSONS FROM THE INCOME TAX DEPARTMENT ENTERED OUR BUSINESS PREMISES AT 14 15, EPIP, SITAPURA INDUSTRIAL AREA , JAIPUR FOR CONDUCTING SURVEY. 4. THAT THE SURVEY OPERATIONS CONTINUED TILL 7 AM NEXT MORNING. 5. THAT DURING THE COURSE OF SURVEY I WAS HARASSED AND PUT UNDER GREAT PRESSURE TO SURRENDER CERTAIN SUM OR OTHERWISE I WA S THREATENED THAT SURVEY WOULD BE CONVERTED INTO SEARCH AND MY RESIDE NTIAL PREMISES WILL BE RAIDED. 6. THAT CERTAIN DOCUMENTS PERTAINING TO THE PURCHASE O F LAND AT FATEHPURAVAS VATIKA, TEHSIL CHAKSU, JAIPUR AND SHRE E NARSINGH ARCADE TEHSIL , SANGANER, DISTT JAIPUR WERE TAKEN POSSESSION BY THE SURVEY TEAM. 7. THAT QUESTIONS WERE PUT TO ME WITH REFERENCE TO T HOSE PAPERS. 8. THAT IN RESPONSE TO THE QUESTIONS I HAD CLARIFIED T HAT THE LAND PURCHASE DEAL OF THE COMPANY HAS LANDED INTO SOME DISPUTE AN D LITIGATION. THE SELLERS WERE NOT TRANSPARENT AND FORTHCOMING IN THE IR DEALINGS. 9. THAT I HAD EXPLAINED THE WHOLE SITUATION AND CLARIF IED THAT A SUM OF RS. 97.30 LACS WAS NEVER PAID BY THE COMPANY IN CAS H TO SHRI HANUMAN SAHAY YADAV BUT THE COMPANY MANAGED TO GET HIS SIGNATURES TO HIS EFFECT WITHOUT PAYING ANY CASH TO HIM TO PROTECT THE INTEREST OF THE COMPANY. 5 10. SIMILARLY I FURTHER EXPLAINED THAT COMPANY HAD NOT PAID THE REFERRED SUM OF RS. 60,38,900(SIXTY LAC THIRTY EIGHT THOUSAN D NINE HUNDRED ) TO SHRI PRANEY KUMAR GAUD AND THE COMPANY HAD GOT H IS SIGNATURES TO THIS EFFECT WITHOUT PAYING ANY CASH TO PROTECT T HE INTEREST OF THE COMPANY. 11. THAT I REPEATEDLY EXPLAINED THIS PRACTICAL ASPECT A ND THE COMPLICATIONS OF THE DEAL WHICH THE DEPARTMENT OFFI CERS REFUSED TO ACCEPT. 12. THAT I WAS FORCED TO ACCEPT THAT THIS AMOUNT WAS PA ID IN CASH TO SHRI HANUMAN SAHAY YADAV AND SHRI PRANEY KUMAR GAUD AND I WAS ALSO FORCED TO ACCEPT THE SAID SUMS AS UNDISCLOSED INCOM E AND WAS FURTHER FORCED TO AGREE TO PAY TAX ON THE SAID SUM. 13. THAT I REFUSED TO ACCEPT THIS UNDISCLOSED INCOME TH EORY AS THIS WAS FACTUALLY INCORRECT. 14. THAT THEY KEPT ON PRESSURIZING ME FOR AGREEING TO T HEIR VERSION. 15. THAT ULTIMATELY IN THE MORNING HOURS OF THE NEXT DA Y WHEN I WAS TIRED, FED UP AND WAS WANTING TO GET RID OFF THESE OFFICERS I SIGNED THE STATEMENTS WHATEVER THEY HAD WRITTEN. 16. THAT I WAS FORCED TO SIGN AND ACCEPT THE UNDISCLOSE D INCOME TO THE TUNE OF RS. 97.30 LACS AND RS. 60,38,900/- AND WAS FORCED TO ISSUE CHEQUES TOWARDS TAX. 17. THAT THE SURVEY TEAM FURTHER FORCEFULLY EXTRACTED M Y CONSENT FOR DISALLOWANCE OF THE FOLLOWING SUMS RELATED TO COMPU COM SOFTWARE LTD. OF THE ALLEGED GROUND ON NON DEDUCTION OF TAX AT SOURCE. FINANCIAL YEAR ASSESSMENT YEAR AMOUNT(RS.) 2004-05 2005-06 2,22,77,528 2005-06 2006-07 30,78,848 2006-07 2007-08 84,56,827 18. THAT UNDER THE ABOVE CIRCUMSTANCES I HEREBY DENY AN D RETRACT MY STATEMENTS RECORDED ON 14.9.2009 AS THE CONTENTS OF THE SAME ARE NOT CORRECT AND HAVE BEEN OBTAINED FORCEFULLY FROM ME. 6 DEPONENT JAIPUR DATE: 21-12-2009 VERIFICATION I, SURENDRA KUMAR SURANA SON OF SHRI SHUBKARAN SURA NA AGED 46 YEARS RESIDENT OF C-117, JANPATH, LAL KOTHI SCHE ME, JAIPUR, CONFIRM THAT THE CONTENTS OF ABOVE AFFIDAVIT IN PAR A NO. 1 TO 18 ARE TRUE. DEPONENT JAIPUR DATE: 21-12-2009 THE REPLY DATED 21-122009 IS AS UNDER:- DATED: 21-12-2009 FROM: SURENDRA KUMAR SURANA, C-117, JANPATH, LAL KOTHI SCHEME, JAIPUR TO: ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-6, JAIPUR SUB: - SURVEY PROCEEDINGS DATED 14.9.2009 - SURRENDER O F RS. 60,38.900/- IN PURCHASE OF LAND- RETRACTION - REG. DEAR SIR, I WAS PROVIDED WITH THE COPIES ON 15.12.09 OF MY ST ATEMENTS RECORDED DURING THE COURSE OF SURVEY ON 14.9.2009. THE COMPANY ALSO IS IN RECEIPT OF A SHOW CAUSE NOTICE D ATED 16.12.2009. 7 WHILE GOING THROUGH THE STATEMENTS I CAME TO KNOW T HAT I HAVE BEEN FORCED TO SIGN ON THE SURRENDER OF RS. 60,38,9 00/- IN RESPECT OF PURCHASE OF LAND IN NURSING ARCADE AN TA REK NAGAR, JAIPUR. THE SAID PIECES OF LAND WERE PURCHASED BY COMPUCOM TECHNOLOGIES PVT. LIMITED ALONG WITH THREE OTHER SI STER CONCERNS NAMELY: 1. SAMBHAV INFOTECH (P) LTD. 2. PALS INFOWAY 3. RISHABH INFOTECH(P) LTD . THE VARIOUS PAYMENTS MADE FOR THE PURCHASE OF RESPE CTIVE PIECES OF PLOT OF LAND ARE DULY REFLECTED IN THE BO OKS OF ACCOUNTS OF THE RESPECTIVE COMPANIES. AFTER MAKING THE PAYMENTS WE FOUND THAT SHRI PRANAY KUMAR GAUD, WHO WAS NOT THE OWNER, WAS NOT TRANSPARENT IN HIS DEALINGS. HE WAS NOT IN POSITION TO GIVE POSSESSION OF THE PLOTS HE HAD SOLD. UNDER THESE CIRCUMSTANCES TO STRENGTHE N OUR CASE AND TO BUILD PRESSURE ON THE SELLER WE GOT HIM SIGN ED RECEIPT OF MONEY WITHOUT ACTUALLY PAYING HIM ANYTHING. HE WAS UNDER PRESSURE BECAUSE HE WAS NOT IN POSITION TO GIVE POS SESSION AND A CRIMINAL CASE COULD BE FILED AGAINST HIM. THIS AM OUNT WAS NEVER PAID. THIS WAS TAKEN AS A PRECAUTIONARY MEASU RE TO PREEMPT ANY MOVE OF THE SELLER TO CHEAT US. HOWEVER , THE SELLER HAS NOT BEEN ABLE TO GIVE POSSESSION OF THESE SAID PLOTS TILL DATE. WE ARE ONLY BUILDING PRESSURE ON HIM WITH REFERENCE TO HIS WRITING. WE ARE ENCLOSING CORRESPONDENCE EVIDENCING THE DISPUTE. DURING THE COURSE OF SURVEY I HAD NARRATED AND EXPL AINED THE WHOLE SITUATION WHICH THE CONCERNED OFFICERS REFUSE D TO ACCEPT AND RECORD. I WAS INSISTING FOR RECORDING MY CORREC T VERSION. I WAS FORCED TO SIGNED ON WHATEVER WAS WRITTEN BY THE OFFICERS. I WAS TIRED, FED UP AND HAD LOST MY PATIENCE. I SUCCU MBED TO THE PRESSURE AND SIGNED ON WHATEVER WAS WRITTEN. IN VIEW OF THE ABOVE, WHATEVER FORCEFUL SURRENDER W AS EXTRACTED FROM ME WAS NOT MY VOLUNTARILY ASSERTION. 8 I, THEREFORE, TOTALLY DENY AND RETRACT THE STATEMEN TS RECORDED ON 14.9.2009. I AM ENCLOSING AFFIDAVIT REGARDING RETRA CTION. I AM AVAILABLE FOR EXAMINATION BY THE DEPARTMENT. I ALSO REQUEST THAT BEFORE TAKING ANY ADVERSE VIEW IN THIS REGARD, ALL CONCERNED PERSONS SHOULD BE EXAMINED AN D TRUTH BE BROUGHT ON RECORD. THANKING YOU, YOURS FAITHFULLY, (SURENDRA KUMAR SURANA) ENCLS: AS ABOVE. THE CONTENTION OF THE ASSESSEE HAS BEEN CONSIDERED AND IS NOT ACCEPTABLE. THE ASSESSEE HIMSELF SURRENDERED THE AMOUNT AS HIS UNDISCLOSED INCOME DURING THE COURSE OF SURV EY. MOREOVER THIS IS THE UNDISCLOSED INCOME OF THE ASSE SSEE. THE ADDITION ON THIS ACCOUNT WORKS OUT TO RS.60,38,900/ -. IT HAS BEEN OBSERVED BY THE ALLAHABAD. HIGH COURT THAT ADD ITION ON THE BASIS OF STATEMENT RECORDED DURING THE SURVEY A RE JUSTIFIABLE. BURDEN IS ON THE ASSESSEE TO ESTABLISH THAT STATEMENT WERE WRONG. AN ADMISSION IS AN EXTREMELY IMPORTANT AND STRONG PIECE OF EVIDENCE 248 ITR 782 ALLAHABAD. THE STATEMENTS MADE DURING THE COURSE OF SURVEY HAVE LE GAL SANCTITY AND EVIDENTIARY VALUE. IT HAS BEEN OBSERVE D IN AIR 1963 SC 1094 THAT IT IS UNSAFE TO RELY ON CONFESSIO NS, MUCH LESS ON RETRACTED CONFESSION UNLESS COURT IS SATISF IED THAT THE RETRACTED CONFESSION IS TRUE AND VOLUNTARILY MADE A ND HAS BEEN CORROBORATED BY MATERIAL PARTICULARS. IT HAS BEEN OBSERVED BY THE APEX COURT IN THE CASE OF PULLANQODE RUBBER PRODUCE CO LTD. VS. STATE OF KERA LA 91 ITR 18 THAT AN ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE THOUGH IT IS NOT CONCLUSIVE. THEREFORE, A STATEMENT MADE VOLUNTARILY BY THE ASSESSEE COULD FORM THE BAS IS OF ASSESSMENT. THE MERE FACT THAT THE ASSESSEE RETRACT ED THE STATEMENTS COULD NOT MAKE THE STATEMENT UNACCEPTABL E. IT HAS 9 ALSO BEEN OBSERVED IN CASE OF HERA LAL MAGAN LAL & CO VS. DCIT SR 52 BY THE ITAT MUMBAI D BENCH THAT RETRACTI ON FROM THE STATEMENT/ ADMISSION AFTER A LONG TIME IS NOT POSSIBLE. IT WAS FURTHER OBSERVED AS UNDER: 1. STATEMENT IN THE NATURE OF DECLARATION COVERED BY T HE PROVISION OF SEC. 115 OF THE EVIDENCE ACT, ARE BIND ING ON THE DECLRANT. THEY CAN EITHER BE RETRACTED NOR DO T HEY REQUIRE ANY CORROBORATION. SUCH DECLARATIONS CAN FO RM THE SOLE BASIS FOR ASSESSMENT. 2. STATEMENTS WHICH ARE NOT IN THE NATURE OF DECLARATI ON U/S 115 OF THE EVIDENCE ACT ARE ALSO BINDING AND CAN FO RM THE SOLE BASIS FOR ASSESSMENT IF THEY ARE NOT EFFECTIVE LY RETRACTED. EFFECTIVE RETRACTION MEANS WHERE THE STA TEMENT IS NOT VOLUNTARILY MADE OR WHERE THE PERSON SEEKING TO RETRACT PROVES BY LEADING COGENT AND RELIABLE EVIDENCE THE ERRONEOUS OR INCORRECT NATURE OF THE FACT STATED OR CONFESSED AT THE EARLIEST. 3. A CONFESSIONAL STATEMENT WHICH IS NOT IN THE NATURE OF DECLARATION U/S 115 OF THE EVIDENCE ACT, CONTINUOUS TO HAVE EVIDENTIARY VALUE EVEN AFTER ITS RETRACTION. SUCH R ETRACTED CONFESSION STATEMENT NEEDS CORROBORATION IF IT HAS TO BE SUCCESSFULLY RETRACTED. A PERUSAL OF THIS STATEMENT RECORDED DURING THE COU RSE OF SURVEY ON 14-09-2009 SHOWS THAT THE STATEMENT MADE IS COHERENT, THE SAME WAS MADE IN THE PRESENT OF THE A DVISOR, SHRI SACHENDRA MISHRA, IMMEDIATELY AFTER THIS SURVEY ON LAPSE OF REASONABLE TIME NO COMPLAINT OF ANY SORT WAS MADE B Y THE DIRECTOR, THE ANSWERS GIVEN DO NOT SEEM TO HAVE BEE N DICTATED TO HIM. MOREOVER THE RETRACTION THROUGH THE AFFIDAV IT IS A MERE AFTER THOUGHT. THERE IS INORDINATE DELAY IN THE RET RACTION. ABOVE ALL, THE RETRACTION IS AGAINST THE PRINCIPLES SET O UT IN SEC. 115 OF THE EVIDENCE ACT RETRACTION IS POSSIBLE ONLY IF THE STATEMENT IS INVOLUNTARILY AND GIVEN UNDER MISTAKES BELIEF OF LA W OR FACT. IN VIEW OF THIS THE RETRACTION THROUGH THE AFFIDAVIT I S REJECTED. ACCORDINGLY, THE SUM OF RS. 60,38,900/- IS ADDED TO THE 10 RETURNED INCOME OF THE ASSESSEE. MOREOVER, DIRECTOR IN THE STATEMENT RECORDED ON 14-09-2009 ADMITTED THAT THE AFORESAID AMOUNT REPRESENTED HIS UNDISCLOSED INCOME. PENALTY PROCEEDING U/S 271(1)(C) ARE BEING INITIATED SEPARA TELY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND CONCEALING PARTICULARS OF INCOME. 2.3 THE LD.CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DECIDED THE ISSUE IN FAVOUR OF REVENUE AFTER OBSERV ING AS UNDER:- I HAVE CONSIDERED FACTS OF THE CASE AND ARGUMENTS TAKEN BY SH. SOGANI AND SH. MISHRA QUITE CAREFULLY. IT IS A FACT THAT DURING THE COURSE OF SURVEY CONDUCTED ON THE B USINESS PREMISES OF THE APPELLANT COMPANY ON 14.9.2009 A PR OPER AND WELL DRAFTED AGREEMENT TO SALE WAS FOUND BETWEEN SH . PRANAY KUMAR GAUR AND SH. SURENDRA KUMAR SURANA. SH. SURAN A IS THE DIRECTOR OF THE APPELLANT COMPANY AS PER NOTING ON THE BACK SIDE OF FIRST PAGE OF THE SAID AGREEMENT THERE WAS CLEAR MENTION OF PAYMENT TO SH. PRANAY KUMAR GAUR OF RS. 74,05,00 0/- OUT OF WHICH THERE WAS PAYMENT BY CHEQUE OF RS. 13,66,1 00/- AND BALANCE AMOUNT OF RS. 60,38,900/- WAS PAID TO SH. P RANAY KUMAR GAUR OTHER THAN CHEQUE. SINCE, THE SAID PAYME NT WAS NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS OF APPEL LANT COMPANY AND ITS ASSOCIATE COMPANIES THEREFORE, THIS FACT WAS CONFRONTED DURING THE COURSE OF SURVEY WITH SH. SUR ENDRA KUMAR SURANA WHO IN HIS STATEMENT RECORDED DURING T HE COURSE OF SURVEY IN PRESENCE OF HIS CA HAS ADMITTED THAT S AID AMOUNT OF RS. 60,38,900/- HAS BEEN PAID IN CASH WHICH REPR ESENTS THE UNDISCLOSED INCOME OF M/S COMPUCOM TECHNOLOGIES PVT . LTD 11 FOR A.Y. 2007-08 FOR WHICH HE HAD ALSO AGREED TO RE VISE THE RETURN OF INCOME AFTER INCORPORATING THE AFORESAID UNDISCLOSED INCOME. HOWEVER, WHEN NO SUCH REVISED RETURN OF INC OME WAS FILED THEN THE AO HAD ISSUED A SHOW CAUSE NOTICE PR OPOSING TO INCLUDE AS UNDISCLOSED INCOME OF RS. 60,38,900/- IN RESPECT OF AFORESAID CASH PAYMENT MADE TO SH. PRANAY KUMAR GAU R. ONLY WHEN THE SAID SHOW CAUSE NOTICE WAS GIVEN SH. SURAN A HAS FILED AN AFFIDAVIT RETRACTING THE EARLIER ADMISSION GIVEN IN THE STATEMENT IN RESPECT OF UNDISCLOSED CASH PAYMENT OF RS. 60,38,900/-. HERE THE STATEMENT IS NOT MERELY AN ST ATEMENT BUT IT IS SUPPORTED WITH DOCUMENTARY EVIDENCE WHICH HAS BEEN FOUND DURING THE COURSE OF SURVEY. THE APPELLANT CO MPANY DID NOT FILE ANY EVIDENCE IN SUPPORT OF RETRACTION OF T HE STATEMENT EITHER IN ASSESSMENT PROCEEDINGS OR IN APPELLATE PR OCEEDINGS. IN MY CONSIDERED VIEW THE SAID ADMISSION WAS NOT THROU GH INTIMIDATION AND COERCION AND WAS SUPPORTED WITH DOCUMENTARY EVIDENCE WHICH WAS FOUND FROM THE BUSIN ESS PREMISES OF THE APPELLANT IN THE PRESENCE OF SH. SU RENDRA KUMAR SURANA DIRECTOR OF THE APPELLANT COMPANY WHO HAS ADMITTED IN PRESENCE OF HIS A/R REGARDING AFORESAID UNDISCLOSED CASH PAYMENT AND AFTER CONSULTATION WIT H HIS AR NAMELY SH. S. MISHRA CA WHO IS ALSO REPRESENTING TH E APPELLANT COMPANY IN THE APPELLATE PROCEEDINGS AND THEREFORE, THE CBDT CIRCULAR DATED 11.3.2003 DOES NOT HAVE APP LICATION IN THE PRESENT FACTS OF THE CASE AND OBVIOUSLY ITAT JAIPUR BENCH DECISION IN THE CASE OF SH. SURESH CHAND KOOL WAL UNDER THESE CIRCUMSTANCES SHALL NOT BE APPLICABLE. RATHER THE 12 ALLAHABAD HIGH COURT JUDGMENT REPORTED AT 248 ITR 7 82, SUPREME COURT JUDGMENT IN THE CASE OF PULLAN QUDE R UBBER PRODUCE CO. LTD. V/S STATE OF KERALA 91 ITR 18 AND ITAT MUMBAI D BENCH DECISION IN THE CASE OF HEERALAL MAG ANLAL & CO. V/S DCIT SPECIAL RANGE 52 SUPPORT THE VIEW TAKE N BY ASSESSING OFFICER. UNDER THESE CIRCUMSTANCES IN MY CONSIDERED VIEW THE ASSESSING OFFICER WAS JUSTIFIED IN HOLDING THAT THERE WAS CASH PAYMENT FROM THE APPELLANT COMPANY WHICH H AS NOT BEEN DISCLOSED IN THE BOOKS OF ACCOUNT AND ACCORDIN GLY THE ADDITION MADE BY ASSESSING OFFICER IS HEREBY UPHELD . THE ALTERNATE PLEA TAKEN BY SH. SOGANI AND SH. MISHRA T HAT THE ADDITION IF AT ALL TO BE MADE CANNOT BE MADE IN THE HANDS OF APPELLANT COMPANY ALONE IS NOT ACCEPTABLE BECAUSE T HE DOCUMENT REGARDING CASH PAYMENT IS FOUND AT THE TIM E OF SURVEY FROM THE PREMISES OF THE APPELLANT COMPANY W HICH IS ALSO OWNED BY THE DIRECTOR OF THE APPELLANT COMPANY ON BEHALF OF APPELLANT COMPANY AND THERE IS NOTHING ON RECORD THAT UNACCOUNTED CASH PAYMENT HAS BEEN MADE BY OTHER THR EE ASSOCIATE COMPANIES. 2.4 BEFORE US, THE LD. AR HAS FILED THE FOLLOWING S UBMISSIONS:- 1. THE APPELLANT COMPANY ALONG WITH THREE OTHER COMPAN IES ENTERED INTO AN AGREEMENT DATED 24.02.2007 TO PURCHASE FIVE PIECES OF LAND FROM SH. AMIT PACHARIA, SH. BIMAL KUMAR AND SH . LAL CHAND MEHTA. THE APPELLANT COMPANY WAS REPRESENTED BY SH SURENDRA KUMAR SURANA, WHEREAS, THE SELLERS WERE REPRESENTED BY SH. PRANAY KUMAR GAUR. THUS, SH. GAUR WAS NOT THE OWNER OF THE 13 PIECES OF LAND PROPOSED TO BE SOLD BY HIM THROUGH A GREEMENT. IT IS EVIDENT FROM THE AGREEMENT ITSELF. THE FACTUAL MATR IX CAN BE CONVENIENTLY UNDERSTOOD FROM THE FOLLOWING CHART: PLOT NO. OWNER AREA IN SQ. YARDS CONSIDERATI ON (@ RS. 4500) BUYER CHEQUE AMOUNT CHEQUE NO. DATE C-92 AMIT PACHARIA 266.66 1,199,970 PAL'S INFOWAY P. LTD. 200,000 404339 21.02.07 13,300 450059 12.05.07 C-93 AMIT PACHARIA 266.66 1,199,970 SAMBHAV INFOTECH P. LTD. 200,000 243422 21.02.07 13,300 51926 03.04.07 C-31 LAL CHAND MEHTA 450 2,025,000 340,000 577181 15.03.07 340,000 577182 15.03.07 C-32 LAL CHAND MEHTA 450 2,025,000 COMPUCOM TECHNOLOGIES P. LTD. 45,000 577205 03.04.07 200,000 51922 26.02.07 108 BIMAL KUMAR 272.22 1,225,000 SAMBHAV INFOTECH P. LTD. 14,500 CASH 26.03.07 7,674,940 1366100 2. THE PURCHASERS TO THE DEED MADE PAYMENTS THROUGH CH EQUES AMOUNTING TO RS. 13,66,100/- ONLY IN THE NAME OF TH E 14 OWNERS/SELLERS. FOLLOWING PAYMENTS WERE MADE BY THE RESPECTIVE COMPANIES AND DULY ACCOUNTED FOR IN THEIR BOOKS OF ACCOUNTS: A) SAMBHAV INFOTECH PVT. LTD. RS. 2,14,500/- B) PALS INFOWAY RS. 2,13,300/- C) SAMBHAV INFOTECH PVT. LTD. RS. 2,13,300/- D) COMPUCOM TECHNOLOGIES PVT. LTD. RS. 7,25,000/- TOTAL RS. 13,66,100/- 3. THEREAFTER SH. SURENDRA KUMAR SURANA BECAME SUSPICI OUS OF THE CONDUCT OF SH. GAUR AS HE WAS NOT ABLE TO PROVIDE P OSSESSION OF THE PROPERTIES AND PROVE THAT THE PROPERTIES WERE F REE FROM ANY ENCUMBRANCES AND HAD OBTAINED JDA APPROVAL. IT WAS FELT THAT SH. GAUR WAS MISREPRESENTING THE FACTS. 4. THE PURCHASERS TO THE AGREEMENT, AS A PRECAUTION, M ADE NO FURTHER PAYMENT BUT STARTED BUILDING PRESSURE ON SH. GAUR. HE WAS FORCED TO SIGN ON THE AGREEMENT AGREEING THAT HE HAD RECEI VED PAYMENT FOR THE ABOVE MENTIONED TRANSACTION SO THAT THE INT ERESTS OF THE PURCHASERS COULD BE SAFEGUARDED. 5. SH. GAUR ALSO BECAME DEFENSIVE KNOWING THAT HE WAS CAUGHT MISREPRESENTING THE FACTS AND WAS UNDER PRESSURE AS HE WAS NOT IN A POSITION TO GIVE POSSESSION AND A CRIMINAL CASE C OULD BE FILED AGAINST HIM. IN ORDER TO COME UNDER THE CONFIDENCE OF THE REPRESENTATIVE OF THE APPELLANT, HE AGREED TO SIGN HAVING RECEIVED THE AMOUNT IN CASH WITHOUT ACTUALLY RECEIVING THE S AME. IN THIS WAY SH. GAUR WAS UNDER THE TWIN PRESSURE OF PROVIDI NG POSSESSION 15 OF THE LAND AND MAKING GOOD ANY LOSSES THAT MAY BE INCURRED BY THE PURCHASERS IN CASE THE DEAL WENT DOWN THE DRAIN . 6. IT IS UNBELIEVABLE, AGAINST HUMAN PROBABILITIES AND NOT AT ALL IN ACCORDANCE WITH THE NORMAL PRUDENCE OF THE BUSINESS MAN TO PAY CASH WITHOUT TAKING POSSESSION OF THE PROPERTY. EQU ALLY UNBELIEVABLE IS THE FACT THAT CASH WILL BE PAID TO A THIRD PERSON AND NOT TO THE OWNER AND NO CONFIRMATION/ SIGNATURES WO ULD BE OBTAINED FROM THE OWNERS/SELLERS. RELIANCE IS PLACED ON THE FOLLOWING JUDGMENT OF HON BLE SUPREME COURT: SUMATI DAYAL VS. COMMISSIONER OF INCOME TAX (1995) 125 CTR (SC) 124 FOR CONSIDERING WHETHER THE APPARENT IS REAL, MATTE R HAS TO BE CONSIDERED BY APPLYING THE TEST OF HUMAN PROBABILIT IES. 7. PRESENT STATUS THE APPELLANT COMPANY HAS NOT OBTAINED THE POSSESSI ON OF THE LAND TILL DATE. NEITHER HAS IT BEEN ABLE TO OBTAIN THE P ERMISSION TO CONSTRUCT ANY BOUNDARY WALLS AROUND THE SAID PIECES OF LAND. ALSO, THE APPELLANT COMPANY HAD FILED AN APPLICATIO N UNDER THE RTI ACT, 2005 TO OBTAIN INFORMATION REGARDING JDA APPRO VAL OF THE SAID PIECES OF LAND. THE REPLY TO THE SAME HAS BEEN OBTA INED STATING THAT THERE IS DISPUTE BETWEEN THE KHATEDAAR AND THE COLONIZERS AND AS SUCH NO JDA APPROVAL HAS BEEN GRANTED.(COPY ENCLOSED) 16 8. IT IS HUMBLY SUBMITTED THAT SH. SURENDRA KUMAR SURA NA RETRACTED HIS STATEMENTS SOLELY BECAUSE NO SUCH PAYMENT WAS E VER MADE IN CASH. 9. RETRACTION OF STATEMENTS BY SH. SURENDRA KUMAR SURA NA IT IS FURTHER SUBMITTED THAT THE STATEMENTS OF SH. SURENDRA KUMAR SURANA (DIRECTOR OF APPELLANT COMPANY) RECORDED DUR ING COURSE OF SURVEY, ON THE BASIS OF WHICH THE LD. AO HAS MADE T HE ADDITION, WERE RETRACTED VIDE AFFIDAVIT DATED 21.12.2009. THE RETR ACTION WAS DONE WITHIN A VERY SHORT SPAN OF TIME. THE APPELLANT CO MPANY FILED THE APPLICATION FOR GETTING THE COPY OF STATEMENTS ON 1 5.12.2009 AND AFTER RECEIVING THEM THE RETRACTION WAS MADE ON 21.12.200 9. THE RETRACTION IS DULY CORROBORATED BY FACTS AND EVIDENCES. 10. IT IS MOST HUMBLY SUBMITTED THAT EVEN THE DIRECTOR OF THE COMPANY, SH. SURENDRA KUMAR SURANA, WAS NOT EXAMINE D BY THE LD AO TO ASCERTAIN THE VERACITY OF RETRACTION. ALTH OUGH, HE HAD SPECIFICALLY CONVEYED HIS AVAILABILITY FOR EXAMINAT ION . UNDER THESE CIRCUMSTANCES DISBELIEVING THE RETRACTION IS UNLAWFUL. CONTENTS OF AFFIDAVIT SHOULD BE ACCEPTED AND ARE BI NDING ON AO UNLESS HE BRINGS ON RECORD THE FACT THAT THE CONTEN TS ARE NOT TRUE. AFFIDAVITS REMAINED UNCONTROVERTED, AND THEREFORE, THE CONTENTS OF THE SAME BECAME FINAL AND BINDING ON THE LD. AO. RE LIANCE IS PLACED ON THE HONBLE SUPREME COURT JUDGEMENT IN TH E CASE OF MEHTA PARIKH & CO. V. CIT REPORTED AT 30 ITR 181. RETRACTION OF SH. SURENDRA KUMAR SURANA IS CORROBOR ATED BY PLENTY OF MATERIAL ON RECORD. THUS THE RETRACTION I S NOT AN 17 AFTERTHOUGHT BUT WAS AN EFFORT TO BRING CORRECT FAC TUAL POSITION ON RECORD. 11. NO ENQUIRY MADE FROM OTHER CONCERNED PERSONS DURING THE COURSE OF ASSESSMENT PROCEEDINGS SH. SUR ENDRA KUMAR SURANA MENTIONED THE FOLLOWING IN HIS LETTER RETRAC TING HIS STATEMENTS I AM AVAILABLE FOR EXAMINATION BY THE DEPARTMENT. I ALSO REQUEST THAT BEFORE TAKING ANY ADVERSE VIEW IN THIS REGARD, ALL CONCERNED PERSONS SHOULD BE EXAMINED AN D TRUTH BE BROUGHT ON RECORD. THE LD AO HAD NEITHER FURTHER EXAMINED SH. SURENDRA KUMAR SURANA NOR DID HE MAKE ANY EFFORTS TO CONTACT ANY OF THE P ARTIES TO THE AGREEMENT. THUS IT SEEMS THAT THE LD AO DELIBERATELY AVOIDED E XAMINING OTHER PERSONS BECAUSE IN THAT CASE THE TRUTH WOULD HAVE S URFACED. 12. CONFESSIONAL STATEMENTS ALONE CAN NOT BE THE BASIS FOR TAXING INCOME IT IS SUBMITTED THAT THE INCOME SHOULD NOT BE TAXED ON THE BASIS OF STATEMENTS RECORDED DURING SURVEY PROCEEDINGS. IT M UST BE CORROBORATED BY THE REQUISITE EVIDENCES. IT CANNOT BE BASED MERELY ON THE CONFESSIONAL STATEMENTS, WHICH ARE EXTRACTED BY THE DEPARTMENT BY PUTTING UNDUE PRESSURE DURING THE COURSE OF SURVEY PROCEEDINGS. THE HONBLE FINANCE MINISTER HAS ACCEPTED THIS FACT ON THE FLOOR OF THE PARLIAMENT. THE CBDT HAS ISSUED CIRCULAR F.NO. 286/ 2/2003- IT (INV) DATED 11.03.2003 IN THIS REGARD WHICH IS BINDING ON THE ASSESSING OFFICERS. 18 THE HONBLE ITAT, JAIPUR BENCH IN THE CASE OF ITO V S. SURESH CHAND KOOLWAL ITA NO. 795/JP/2003 A.Y. 2000-01 HAS HELD A S UNDER (P.B. PAGE NO. 46-50) :- THE PREVALENCE OF FORCED CONFESSION HAS NOT BEEN RECOGNIZED BY THE FINANCE MINISTER HIMSELF IN THE C OURSE OF HIS BUDGET SPEECH, 2003 AND FOLLOWED BY A BOARD CIR CULAR NO. 286/2/2003- IT (INV), DATED MARCH 10, 2003 REQU IRING THE ASSESSING OFFICERS TO AVOID SUCH COMPULSION. TH E PRIVY COUNCIL IN BHUBONI SAHU VS. THE KING, AIR 194 9 PC 1257, HAD POINTED OUT TO THIS TENDENCY ON THE PA RT OF OFFICIALS TO EXTORT CONFESSION BY INTIMIDATION AND COERCION AND REQUIRED INDEPENDENT CORROBORATION OF SUCH CONF ESSION, A VIEW WHICH HAS BEEN ENDORSED BY THE SUPREME COURT IN KASHINDRA SINGH VS. STATE OF MP, AITR 1952 SC 159. IT WAS HELD BY THE HONBLE APEX COURT IN THE CASE OF PULLANQODE RUBBER PRODUCE CO. LTD. VS. STATE OF KER ALA & ANOTHER, 91-ITR-18 SC THAT IT IS OPEN TO THE APPELL ANT WHO MADE THE ADMISSION TO SHOW THAT IT WAS INCORRECT. FURTHER RELIANCE IS PLACED ON THE RECENT JUDGEMENT OF THE HONBLE ITAT, JAIPUR BENCH , JAIPUR IN THE CASE OF SHRI BHAGWAN DAS THAWRANI VS. ITO ITA NO. 523/JP/2009 (A) ITA NO. 691/JP/2009 (D) 19 RELIANCE IS ALSO PLACED ON THE DECISION OF THE HON BLE KERALA HIGH COURT IN THE CASE OF PAUL MATHEWS AND SONS VS. CIT, 263 ITR 101(KER.), WHEREIN THE HONBLE KERALA HIGH COUR T HELD AS UNDER: THE PROVISION ALSO ENABLES THE INCOME-TAX AUTHORIT Y TO IMPOUND AND RETAIN IN HIS CUSTODY FOR SUCH PERIOD A S HE THINKS FIT ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS INSPECTED BY HIM, PROVIDED THE AUTHORITY RECORDS HI S REASONS FOR DOING SO AND ALSO SHALL NOT RETAIN THE BOOKS OF ACCOUNTS FOR A PERIOD NOT EXCEEDING 15 DAYS. SECTIO N 133A(3)(III) ENABLES THE AUTHORITY TO RECORD THE ST ATEMENT OF ANY PERSON WHICH MAY BE USEFUL FOR, OR RELEVANT TO, ANY PROCEEDING UNDER THE ACT. SECTION 133A, HOWEVER, EN ABLES THE INCOME-TAX AUTHORITY ONLY TO RECORD ANY STATEME NT OF ANY PERSON WHICH MAY BE USEFUL, BUT DOES NOT AUTHOR IZE TAKING ANY SWORN STATEMENT. ON THE OTHER HAND, WE F IND THAT SUCH A POWER TO EXAMINE A PERSON ON OATH IS SPECIFICALLY CONFERRED ON THE AUTHORIZED OFFICER ON LY UNDER SECTION 132(4) OF THE INCOME-TAX ACT IN THE COURSE OF ANY SEARCH OR SEIZURE. THUS, THE INCOME-TAX ACT WHENEVE R IT THOUGHT FIT AND NECESSARY TO CONFER SUCH POWER TO E XAMINE A PERSON ON OATH, THE SAME HAS BEEN EXPRESSLY PROVI DED WHEREAS SECTION 133A DOES NOT EMPOWER ANY INCOME-TA X OFFICER TO EXAMINE ANY PERSON ON OATH. THUS, IN CONTRADISTINCTION TO THE POWER UNDER SECTION 133A, SECTION 132(4) OF THE INCOME-TAX ACT ENABLES THE AUTHORIZED OFFICER 20 TO EXAMINE A PERSON ON OATH AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH EXAMINATION CAN ALSO BE USE D IN EVIDENCE UNDER THE INCOME-TAX ACT. ON THE OTHER HAN D, WHATEVER STATEMENT IS RECORDED UNDER SECTION 133A O F THE INCOME-TAX ACT IT IS NOT GIVEN ANY EVIDENTIARY VALU E OBVIOUSLY FOR THE REASON THAT THE OFFICER IS NOT AU THORIZED TO ADMINISTER OATH AND TO TAKE ANY SWORN STATEMENT WHI CH ALONE HAS EVIDENTIARY VALUE AS CONTEMPLATED UNDER L AW. THEREFORE, THERE IS MUCH FORCE IN THE ARGUMENT OF L EARNED COUNSEL FOR THE APPELLANT THAT THE STATEMENT ELICIT ED DURING THE SURVEY OPERATION HAS NO EVIDENTIARY VALUE AND T HE INCOME-TAX OFFICER WAS WELL AWARE OF THIS. 13. RELIANCE BY THE LOWER AUTHORITIES ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS IS MISPLACED AND HENCE DISTINGUISHAB LE: PULLANGODE RUBBER PRODUCE CO. LTD. V. STATE OF KERA LA (1973) 91 ITR 18(SC) IN THIS CASE THE HONBLE SUPREME COURT HAS HELD THA T: AN ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EV IDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE. THUS THE CASE LAW IS IN FAVOUR OF THE APPELLANT COM PANY AND SUPPORTS ITS CONTENTION THAT ADMISSION CANNOT BE CO NCLUSIVE EVIDENCE. THE PERSON WHO MADE THE ADMISSION HAS CLE ARLY SHOWN THAT IT WAS INCORRECT. HIRALAL MAGANLAL & CO. V. DCIT (2005) 96 ITD 113 21 IN THIS CASE THE HONBLE ITAT MUMBAI D BENCH WAS DEALING WITH SEARCH CASE AND STATEMENTS RECORDED U/S 132(4) , WHEREAS THE CASE UNDER APPEAL IS OF SURVEY AND STATEMENTS A RE RECORDED DURING SURVEY. THEREFORE, THE CASE IS DISTINGUISHED BEING BASED ON DIFFERENT SET OF FACTS AND LAW. 14. LD CIT(A) HAS RELIED ON THE JUDGEMENT OF DR. S C GU PTA VS CIT (2001) 248 ITR 782 (ALL) , THE RELIANCE ON WHICH IS ALSO MISPLACED AS THE APPELLANT COMPANY HAS FULLY DISCHARGED ITS B URDEN OF PROVING THAT ADMISSION TO THE WRONG BY BRINGING THE FACT OF DISPUTE ON RECORD. THE BURDEN SHIFTED ON THE LD AO WHO FAILED TO DISCHARGE HIS BURDEN BY AVOIDING THE EXAMINATION OF ALL CONCERNED PERSONS WHEREAS SPECIFIC REQUEST WAS MADE TO EXAMIN E THEM. 15. FOLLOWING QUESTIONS ARE PERTINENT TO DECIDE THE ISS UE UNDER APPEAL: I) CAN ANY PRUDENT PERSON MAKE PAYMENT OF CASH TO A PE RSON WHO IS NOT THE OWNER OF THE LAND WITHOUT INSISTING RECE IPT FROM THE OWNER? IT MAY BE NOTED THAT AS PER THE IMPOUNDED DOCUMENT CASH IS SAID TO HAVE BEEN PAID TO SH. PRANAY KUMAR GAUR WHO IS NOT THE OWNER OF THE LAND. II) WHY NO ENQUIRY, IN SPITE OF SPECIFIC REQUEST, WAS M ADE FROM THE CONCERNED PERSONS? IT MAY BE NOTED THAT DUE TO THE DISPUTE, APPELLANT COMPANY WAS NOT IN A POSITION TO PRODUCE THE CONCERNED PERSONS. III) WHY NO ENQUIRY WAS MADE ABOUT THE PRESENT OWNERSHIP STATUS OF THE LANDS? 22 IT MAY BE NOTED THAT EVEN TILL DATE NEITHER THE OWN ERSHIP NOR THE POSSESSION IS WITH THE APPELLANT COMPANY. IN VIEW OF THE ABOVE, A HUMBLE PRAYER IS MADE THAT THE ADDITION OF RS.60,38,900/- MAY PLEASE BE DELETED. 2.5 ON THE OTHER HAND, THE LD.DR STATED THAT IN THI S CASE, THE ASSESSEE HAS NOT BROUGHT ON RECORD TO SHOW THAT STATEMENT WAS NO T VOLUNTARILY. THE DOCUMENT WAS FOUND AND THE ADDITION IS MADE ON THE BASIS OF DOCUMENT. THE RETRACTION IS AN AFTERTHOUGHT. 2.6 WE HAVE HEARD BOTH THE PARTIES. THE ASSESSEE HA S FILED AN AFFIDAVIT AND ALSO REQUESTED THAT HE MAY BE EXAMINED. IT WAS ALSO STATED THAT THE SURVEY CONTINUED UPTO 7.00 AM AFTER COMMENCING THE SURVEY OPERATION IN THE PRECEDING DAY. THE DIRECTOR OF THE COMPANY RETR ACTED THE STATEMENT AFTER HE GOT A COPY OF THE STATEMENT. WHEN THE ASSESSEE H AS FILED A RETRACTION WITHIN THE SHORTEST POSSIBLE TIME THEN THE AO SHOUL D HAVE COLLECTED EVIDENCES. THE C.B.D.T. HAS ALSO ISSUED INSTRUCTION S THAT IN SURVEY THE EMPHASIS SHOULD BE ON COLLECTION OF EVIDENCES AND N O EFFORT SHOULD BE MADE TO MAKE ADDITION ON THE BASIS OF CONFESSION. IT HAS BEEN MENTIONED BY THE DIRECTOR OF THE COMPANY THAT THE COMPANY HAS NOT PA ID ANY SUM TO SHRI GAUR. IT IS NOT THE CASE OF THE REVENUE THAT THE CO MPANY WAS ASKED TO 23 PRODUCE SHRI GAUR TO ESTABLISH THAT MONEY WAS NOT R ECEIVED BY HIM. IF THE MONEY WAS PAID THEN THERE SHOULD BE ITS UTILIZATION ALSO. 2.7 MOREOVER, IT IS BEING HELD BY JAIPUR BENCH THAT STATEMENT U/S 133 CAN BE A SOURCE OF INFORMATION BUT IT CANNOT BE USED AS A CONCLUSIVE EVIDENCE. THE HELD PORTION OF ITAT JAIPUR BENCH AS PER IN THE CASE OF ITO VS SMT. PRATIBHA GOYAL, 136 TTJ 597 IS REPRODUCED AS UNDER: - SEC 133A(3)(III) ALLOWS AN IT AUTHORITY TO RECORD THE STATEMENT OF ANY PERSON WHICH MAY BE USEFUL FOR OR RELEVANT TO ANY PROCEEDINGS UNDER THE I.T. ACT. IT DOES NOT AUT HORIZE THE I T AUTHORITIES TO RECORD THE STATEMENT ON OATH HENCE , THE LD.CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION BE CAUSE THE ADDITION IS MADE SOLELY ON THE BASIS OF THE STATEME NTS MADE DURING THE COURSE OF SURVEY. MOREOVER, THE RETURN W AS FILED BEFORE THE SURVEY WAS CONDUCTED AND THE REVENUE WAS NOT OBTAINED FRESH RETURN AND, THEREFORE, IT CANNOT BE SAID THAT THE INVESTMENT SHOWN IN THE RETURN WAS WRONG. IN CASE T HE REVENUE WAS OF THE VIEW THAT THE ASSESSEE HAS PAID ON MONEY THEN THE REVENUE COULD HAVE TAKEN ACTION U/S 148 PAUL MATHEW & SONS VS CIT (2003), 181 ITR (KER) 207: (2 003) 267 ITR 101 (KER.), CIT VS S. KHADAR KHAN SON (2008) 21 4 CTR (MAD.) 589 : (2008) 300 ITR 157 (MAD), ASSTT. CIT, VS RAVI AGRICULTURAL INDUSTRIES (2009), 121 TTJ (AGRA) 90 3 : (2009) 20 DTR (AGRA) (TM ) (TRIB) 379 : (200() 117 ITD 33 8 (AGRA) ( TM), TDT MARKETING (P) LTD. VS ASSTT. CIT (ITA NO . 24 1069DEL/2007 DATED 3 RD OCT. 2008) AND UNIVERSAL IMPEX VS ITO 2009-TIOL-514-ITAT-MUMBAI RELIED ON. 2.8 AS PER ORDER OF ITAT JAIPUR BENCH IN THE CASE O F SHREE JEWELLERY MART, JAIPUR IN ITA NO. 962/JP/09 DATED 25-02-2011, THE BENCH HAS OBSERVED AS UNDER: 2.19 SECTION 132(4) OF THE ACT AUTHORIZES AN OFFICE R TO RECORD THE STATEMENT ON OATH. WHILE SECTION 132(4A) MAKES A PRESUMPTION THAT THE BOOKS OF ACCOUNT AND THE DOCUM ENTS FOUND DURING THE COURSE OF SEARCH ARE TO BE CONSIDERED AS TRUE. SECTION 292C OF THE ACT WAS INSERTED BY THE FINANCE ACT, 20 07 W.R.E.F. 01- 10-1975 SO AS TO MAKE THE PRESUMPTION, OF THE BOOKS OF ACCOUNT FOUND DURING THE COURSE OF SEARCH AVAILABLE DURING ANY PROCEEDINGS UNDER THE I.T. ACT. SUCH PRESUMPTION H AS BEEN MADE APPLICABLE FOR THE SURVEY U/S 133A OF THE ACT W.E.F . 01-06-2002 AS PER FINANCE ACT, 2008. THOUGH THE PRESUMPTION IN RE SPECT OF BOOKS OF ACCOUNT AS FOUND IN SEARCH HAS BEEN MADE A PPLICABLE FOR THE SURVEY YET THERE IS NO CORRESPONDING PROVISION TO MAKE THE AUTHORIZED OFFICER TO RECORD THE STATEMENT ON OATH DURING THE COURSE OF SURVEY. HENCE, THE STATEMENT RECORDED DUR ING THE COURSE OF SURVEY IS NOT A CONCLUSIVE EVIDENCE THOUGH THE I NFORMATION CONTAINED IN SUCH STATEMENT CAN BE UTILIZED AND THE ASSESSEE, WHO HAS GIVEN THE STATEMENT WILL HAVE RIGHT TO SAY THAT THE CONTENTS IN THE STATEMENT ARE NOT CORRECT AND HENCE CANNOT BE R ELIED UPON. WE THEREFORE, HOLD THAT THE REVENUE CANNOT MAKE THE AD DITION SOLELY ON THE BASIS OF THE STATEMENTS RECORDED DURING THE COURSE OF SURVEY. 25 2.9 WE THEREFORE, FEEL THAT LD CIT(A) WAS NOT JUSTI FIED IN CONFIRMING THE ADDITION OF RS. 60,38,900/- 3.0 NOW WE TAKE UP THE APPEAL OF THE REVENUE WHEREI N THE REVENUE HAS RAISED THE FOLLOWING GROUND OF APPEAL. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DIRECTI NG TO TREAT THE INCOME EARNED FROM DEALINGS OF SHARES/ MF S AS CAPITAL GAIN AND NOT AS BUSINESS INCOME WITHOUT APPRECIATING THE FACT THAT VOLUME AND FREQUENCY OF THE TRANSACTIONS CLEARLY SUGGESTS THAT THE GAIN SHOULD BE TREATED AS INCOME FROM BUSINESS 3.1 THE ABOVE REFERRED ISSUE IS COVERED BY THE DECI SION OF TRIBUNAL IN THE CASE OF THE ASSESSEE FOR EARLIER ASSESSMENT YEAR AN D THE REVENUE HAS NOT ACCEPTED THE ORDER OF THE TRIBUNAL WHILE DECIDING T HE ISSUE IN FAVOUR OF THE ASSESSEE. VIDE ORDER DATED 18-10-2010 IN ITA NO. 38 6/JP/10, IT HAS BEEN HELD AS UNDER:- 10. WE HAVE HEARD BOTH THE PARTIES. THE ONLY IS SUE RAISED BEFORE US BY THE REVENUE IS IN RESPECT OF TR EATING THE PROFIT FROM PURCHASE/SALES OF SHARES/UNITS. THE A.O . HAS TREATED SUCH PROFIT UNDER THE HEAD BUSINESS WHILE THE LD.CI T(A) AFTER FOLLOWING THE ORDER OF TRIBUNAL IN THE CASE OF ASSE SSEE, HELD THAT SUCH PROFIT IS TO BE TAXED UNDER THE HEAD CAPI TAL GAIN. IT 26 WILL BE USEFUL TO REPRODUCE THE FINDINGS GIVEN BY T RIBUNAL IN THE CASE OF THE ASSESSEE FOR THE A.Y. 2004-05 VIDE ORDER DATED 30.09.2008:- 9. CONSIDERING THE ARGUMENTS ADVANCED BY THE PARTIES, DISCUSSED ABOVE, WE FIND SUBSTANCE IN THE CONTENTIONS OF THE LD.A/R. THE PROBLEM IS TO BE APPROACHED IN THE LIGHT OF INTENTION OF THE ASSESSE E. IN THE CASE OF RAM NARAIN & SONS PVT.LTD. 41 ITR 534 (SC), THE HONBLE SUPREME COURT HAS BEEN PLEASED TO HOLD THAT EVEN IF THE ASSESSEE IS A DEALER, THE INT ENTION OF THE ASSESSEE WAS OF PARAMOUNT IMPORTANCE. IN THE CA SE OF CIT VS. S.RAMAAMIRTHAM 217 ITR 206 (MAD.), THE HONBLE MADRAS HIGH COURT HAS BEEN PLEASED TO HOLD THAT THERE IS NOTHING IN LAW WHICH PROHIBITS A TRAD ER IN SHARES TO INVEST IN SHARES. THE INTENTION OF THE AS SESSEE IS RELEVANT TO DETERMINE WHETHER HE IS CARRYING ON BUSINESS OF SHARES OR INVESTMENTS. WHERE ASSESSEE H AS BEEN HOLDING SHARES FOR A LONG TIME AND HAS BEEN UTILIZING THE SURPLUS FUNDS ONLY FOR THE INVESTMENT S, INCOME FROM SALE OF SHARES IS ASSESSABLE UNDER THE HEAD CAPITAL GAIN. IN THE CASE OF VESTA INVESTMENTS & TRADING CO.PVT.LTD VS. CIT 70 ITD 200, THE CHANDIGA RH BENCH OF THE TRIBUNAL HAS HELD THAT SALE OF SHARES RECORDED IN SEPARATE INVESTMENT PORTFOLIO ACCOUNT G AVE RISE TO CAPITAL GAINS AND NOT BUSINESS INCOME. INTE NTION OF THE ASSESSEE AT THE TIME OF ACQUISITION OF SHARE S IS MATERIAL. IN THE CASE OF L.SOHAN LAL GUPTA VS. CIT 33 ITR 786, IT HAS BEEN HELD THAT THE INTENTION OF THE ASSESSEE AT THE TIME OF PURCHASE OF SHARES IS OF PARAMOUNT IMPORTANCE. IN THE CASE OF CIT VS. KARAMCHAND THAPAR & SONS PVT.LTD. 115 ITR 250 (CAL.), THE SURPLUS REALIZED ON SALE OF SHARES HELD AS INVESTMENT HAS BEEN HELD BY HONBLE HIGH COURT TO B E TREATED AS CAPITAL GAIN DESPITE THE FACT THAT THE A SSESSEE COMPANY WAS A DEALER IN SHARES. HOWEVER, SINCE IN ABOUT 10% OF THE TOTAL HOLDING THE COMPANY INTENDED TO BE AN INVESTOR RATHER THAN A DEALER, IT WAS HELD TO BE 27 CAPITAL GAIN AND NOT BUSINESS INCOME. IN THE CASE O F SHAH LA INVESTMENTS & FINANCIAL CONSULTANTS (P) LTD . VS. DCIT (2005) 250 T 371 (HYD) IT WAS HELD THAT ME RE VOLUME OF TRANSACTIONS WOULD NOT ALTER THE NATURE O F TRANSACTION, UNLESS THE SURROUNDING CIRCUMSTANCES SUPPORTS THE SAME. THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF JANAK S. RANGWALLA VS. ACIT (2007) 115 0 T 67 HAS HELD THAT THE MERE FACT THAT INVESTMENT IN S HARES BY AN ASSESSEE WAS ON A LARGE MAGNITUDE WOULD NOT DECIDE THE NATURE OF TRANSACTION SO AS TO HOLD THAT THE ASSESSEE WAS TRADER IN SHARES, MORE SO AS FOR PAST SEVERAL YEARS INCOME FROM SALES OF SHARES HAD BEEN ASSESSED AS CAPITAL GAIN. THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. GUEST KEEN & NETTLEFOL D LTD. 115 ITR 205 HAS BEEN PLEASED TO HOLD THAT THE ASSESSEE NOT BEING A DEALER IN SHARES, THE SURPLUS WAS TO BE TREATED AS CAPITAL GAIN. THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. SIMPSON GNERAL FINANCE CO. LTD. 230 ITR 222 HAS BEEN PLEASED TO HOLD THAT GAINS SHOULD BE ASSESSED AS CAPITAL GAINSSINCE WHAT WAS SOLD WAS ONLY INVESTMENT AND NOT STOCK IN TRADE. TH E HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. MANNA LAL NIRMAL KUMAR SURANA 264 ITR 116 HAS BEEN PLEASED TO HOLD THAT PROFIT OF SALE OF JEWELLERY, P RECIOUS STONE SHALL BE TREATED AS CAPITAL GAIN AND NOT AS B USINESS INCOME SINCE THE SAME WAS TREATED BY THE ASSESSEE A S CAPITAL ASSET AND NOT AS STOCK IN TRADE. 10. IN VIEW OF CBDT CIRCULAR NO.4/2007 DATED 15.6.2007 AND THE ABOVE REFERRED DECISIONS, THE BRO AD PRINCIPLE ARISES THAT WHERE SHARES ARE RECORDED IN SEPARATE INVESTMENT PORTFOLIO, IT WOULD GIVE RISE T O CAPITAL GAIN, MERELY BECAUSE INVESTMENT IN SHARES W AS OF LARGE MAGNITUDE WOULD NOT MAKE THE ASSESSEE TRADER IN SHARES, MORE SO WHEN PAST SEVERAL YEARS INCOME HAS BEEN ASSESSED AS CAPITAL GAINS, WHERE INVESTMENT IN SHARES IS NOT CONVERTED INTO STOCK IN TRADE, PROFIT ON SALE OF SHARES HAS TO BE ASSESSED AS CAPITAL GAIN; THE P ROBLEM MUST HAVE BEEN APPROVED IN THE LIGHT OF THE INTENTI ON OF THE ASSESSEE AND INTENTION HAS TO BE SEEN AT THE TI ME OF 28 PURCHASES OF SHARES WHICH IS WITHIN THE KNOWLEDGE O F THE ASSESSEE AND FOR THAT HE SHOULD PRODUCE THE EVIDENC E THAT IT HAS MAINTAINED DISTINCTION BETWEEN THE SHAR ES WHICH ARE STOCK IN TRADE AND WHICH ARE HELD BY WAY OF INVESTMENT. WE ARE OF THE VIEW THAT VOLUME OF INVES TMENT IS A RELATIVE TERM HENCE CAN NOT BE A DECIDING FACT OR TO INFER THE INTENTION OF AN ASSESSEE BEHIND THE SHARE TRANSACTION. WE ALSO AGREE WITH THE CONTENTION OF T HE LD.D/R TO SOME EXTENT THAT REGULARITY IN TRANSACTIO NS AND FREQUENCY IN PURCHASES AND SALES IS ALSO AN IMPORTANT FACTOR TO EXAMINE THE VERY INTENTION OF T HE TRANSACTIONS. THUS IN OUR VIEW, GUIDED BY THE ABOVE DISCUSSION, IT IS ULTIMATELY THE VERY INTENTION OF THE ASSESSEE AT THE TIME OF PURCHASE OF SHARE WHICH IS THE DECIDING FACTOR AS TO WHETHER THE TRANSACTION WAS F OR THE PURPOSE OF INVESTMENT. AND TO DRAWN AN INFERENCE ON THE INTENTION AN ASSISTANCE OF REGULARITY IN TRANSACTIO N AND FREQUENCY IN PURCHASES IN SHARES ALSO CAN BE TAKEN TO SOME EXTENT BUT NOT AS AN ABSOLUTE FACTOR. BECAUSE EVEN AN INVESTOR ADJUDGING THE CURRENT CIRCUMSTANCE/DEVELOPMENT MAY DECIDE TO SELL THOSE SHARES TO PROTECT HIMSELF FROM EXPECTED LOSS IN FUT URE INSTEAD OF HOLDING THOSE SHARE AS INITIALLY INTENDE D TO, AND TO INVEST IN OTHER SHARES. WE, HOWEVER, FIND FR OM THE FACTS OF THE PRESENT CASE THAT IN COMPARISON TO THE NUMBER OF TRANSACTIONS HAVING HOLDING PERIOD SIX MONTHS TO 3 YEARS, SUCH TRANSACTION ARE VERY FEW WH ERE HOLDING PERIOD IS LESS THAN SIX MONTHS. THESE FEW TRANSACTIONS THUS CANNOT BE A DECIDING FACTOR IN TH E PRESENT CASE THAT THE INITIATION WAS NOT TO INVEST BUT TO TRADE ESPECIALLY WHEN THE ASSESSEE HAD BEEN EARNING DIVIDENDS ON THOSE SHARES IN EARLIER YEARS. UNDER T HESE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE ASSESSEE AS AN INVESTOR IS VERY MUCH ENTITLED TO CLAIM CAPITAL GAI NS ON THE SHARES SOLD DURING THE YEAR. WE THUS WHILE SETT ING ASIDE THE ORDERS OF THE LOWER AUTHORITIES IN THIS R EGARD, DIRECT THE AO TO ALLOW THE CLAIM OF CAPITAL GAIN OF ASSESSEE ACCORDINGLY. 29 11. SO FAR AS THE CLAIM REGARDING EARNING ON SALE OF UNITS OF MUTUAL FUNDS IF CONCERNED, FOLLOWI NG FACTS ARE EMERGING:- IN CASE OF INVESTMENT IN MUTUAL FUNDS, THE ASSESSEE HAS OPENING INVESTMENT OF RS.4,80,00,000/- IN FOUR FUNDS. ALL THESE INVESTMENTS WERE SOLD DURING THE YEAR AFTER HOLDING IT FOR MORE THAN ONE YEAR FOR RS.5,47,03,113/- RESULTING INTO A LONG TERM CAPITAL GAIN OF RS.25,34,099/-. DURING THE YEAR ASSESSEE MADE INVESTMENT IN 17 SCHEMES OF MUTUAL FUNDS (PB 42) FOR RS.7,45,65,070/-. OUT OF IT UNITS OF FOUR SCHEMES HAVING COST OF RS.1,51,91,500/- WAS DISPOSED OF FOR RS.1,50,71,608/- RESULTING INTO A SHORT TERM CAPITAL LOSS OF RS.1,19,892/- BUT AT THE SAME TIME BY MAKING INVESTMENT IN THESE SCHEMES, THE ASSESSEE RECEIVED DIVIDEND OF RS.30,27,089/-. FROM THE ABOVE, IT APPEARS THAT IN MUTUAL FUNDS THOUGH ITS VOLUME IS HIGHER BUT NUMBER OF TRANSACTI ONS AND THE FREQUENCY IS VERY LESS. WE ALSO FIND THAT O N INVESTMENT IN UNITS SUBSTANTIAL DIVIDEND WAS EARNED . THE MAJOR INVESTMENTS MADE DURING THE YEAR WAS HELD BY THE ASSESSEE. THE OLD INVESTMENTS WERE SOLD YIELDING SUBSTANTIAL CAPITAL GAIN. IN THE BACKGROUND OF THE ABOVE DISCUSSION, WE ARE THUS OF THE VIEW THAT THE TRANSA CTION IN MUTUAL FUNDS AS PER THE PRINCIPLES LAID DOWN IN THE ABOVE CBDT CIRCULAR IS ONLY AN INVESTMENT AND, THEREFORE, THE GAIN ARISING THEREFROM CAN ONLY BE ASSESSED AS CAPITAL GAIN. WE THEREFORE, WHILE SETTI NG ASIDE ORDERS OF THE LOWER AUTHORITIES IN THIS REGAR D, DIRECT THE AO TO ALLOW THE CLAIMED CAPITAL GAIN EAR NED ON THE SALE OF UNITS OF MUTUAL FUNDS. THE GROUND IS ACCORDINGLY ALLOWED. 30 11. THE TRIBUNAL VIDE ORDER DATED 28.08.2009 IN THE CASE OF THE ASSESSEE FOR THE A.Y. 2005-06 UPHELD THE ORDER OF LD.CIT(A) THAT PROFIT FROM PURCHASE/SALE OF SHARES/ UNITS IS TO BE TAXED THE HEAD CAPITAL GAIN. 12. THUS THE ISSUE RAISED BEFORE US STANDS COVERED BY THE DECISION OF TRIBUNAL IN EARLIER YEARS IN THE CASE O F THE ASSESSEE AND THEREFORE THE SAME IS TO BE DECIDED AGAINST THE REVENUE. 3.2 FOLLOWING OUR ORDER, WE DECIDE THAT LD.CIT(A) W AS JUSTIFIED IN DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED WHILE APPEAL OF THE REVENUE IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 14-10 -2011. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 14/10/2011 *MISHRA COPY FORWARDED TO :- 1. M/S. COMPUCOM TECHNOLOGIES (P) LTD. 2. THE ACIT/DCIT, CIRCLE- 6, JAIPUR 3. THE LD. CIT BY ORDER 4. THE LD. CIT(A) 5. THE LD.DR 6. THE GUARD FILE (ITA NO.1228/JP /10) A.R, ITAT, JAIPUR 31