Assistant Commissioner of Income Tax, Circle - 1, Dibrugarh V. M/s. Brahamputra Diagnostics & Reasearch Centre, Dibrugarh

ITA 156/GTY/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8544 (ITAT-GUWAHATI)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 15-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANDEEP SENGUPTA J
• Assessee Lawyers: V K DEORAH
• Keywords: Unexplained investment; Depreciation; Block assessment; TDS
• Section: 143(3); 133A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL GUWAHATI BENCH, GUWAHATI BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 156 / GAU / 2017 & C.O. NO.02/GAU/2017 (A/O ITA NO.156/GAU/2017 ASSESSMENT YEAR :2013-14 ACIT, CIRCLE-1, C.R BUILDING, DIBRUGARH- 786003 V/S . M/S BRAHMAPUTRA DIAGNOSTICS & HOSPITAL LTD. PALTAN BAZAR, DIBRUGARH [ PAN NO.AACCB 2448 L ] /APPELLANT .. / RESPONDENT/ /CO-OBJECTOR /BY APPELLANT SHRI SANDEEP SENGUPTA, JCIT-DR /BY RESPONDENT SHRI V.K. DEORAH, FCA /DATE OF HEARING 05-07-2019 /DATE OF PRONOUNCEMENT 12 -07-2019 / O R D E R PER BENCH:- THIS REVENUES APPEAL AND ASSESSEES CROSS OBJECTI ON FOR ASSESSMENT YEAR 2013-14 ARISE AGAINST THE COMMISSIONER OF INCO ME TAX (APPEALS)- DIBRUGARHS ORDER DATED 22.06.2017 PASSED IN CASE N O.DBR-12/2016- 17/2016-17, INVOLVING PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE REVENUES SOLE SUBSTANTIVE GROUND RAISED DUR ING THE COURSE OF HEARING SEEKS TO RESTORE THE ASSESSING OFFICERS AC TION MAKING ADDITION OF ITA NO.156/GAU/2017 & CO 02/GAU/2017 A.Y. 20 13-14 ACIT, CIR-1DBR VS. M/S BRAHMAPUTRA DIAGNOSTICS & HOSPITAL LTD. PAGE 2 RS.3,50,00,000/- ON THE BASIS OF TAXPAYERS SURVEY STATEMENT RECORDED ON 07.12.2012. THE CIT(A)S DETAILED DISCUSSION DELETI NG THE IMPUGNED ADDITION READS AS UNDER:- 5. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDE R, THE SUBMISSIONS OF THE APPELLANT AND OTHER MATERIALS AVAILABLE ON RECORDS AND I HAVE COME TO THE CONCLUSION THAT WHILE MAKING ADDITION OF RS.1,69,47,189/- THE AO HAS SOLELY RELIED UPON THE STATEMENT OF ONE OF THE DIRECTORS GIVEN TO THE SURV EY TEAM IN WHICH HE DECLARED AN AMOUNT OF RS.3,50,00,00/- AS INCOME FOR AY 2013-14 IN ADDITION TO ITS NORMAL INCOME AS SHOWN IN ITS RETURN. HE HAS COMPLETELY IGNORED T HE FACT THAT THE SAID DIRECTOR HAS RETRACTED TD HE SAME IN COURSE OF THE ASSESSMENT PR OCEEDINGS. I AM OF THE OPINION THAT STATEMENT RECORDED U/S. 133A DOES NOT HAVES EV IDENTIARY VALUE UNLIKE U/S 132(4), WHICH EMPOWERS THE AUTHORIZED OFFICER IN CA SE OF A SEARCH TO RECORD SWORN STATEMENT. THE FINANCE MINISTER, IN HIS BUDGET SPEE CH FOR THE YEAR 2003-04, SAID THAT ONE OF HIS PRIORITIES CONCERNING SEARCH AND SURVEY OPERATIONS IS THAT NO CONFESSIONS SHALL BE OBTAINED DURING SEARCH PROCEEDINGS. JUDICI AL OPINION ALSO IS THAT ADMISSIONS RECORDED DURING SURVEY OPERATIONS HAVE NO EVIDENTIA RY VALUE AND CBDT CIRCULAR NO. 286/2/2003/IT(INV) DATED 10.03.2003 BARS ADDITION O N THE BASIS OF CONFESSION. I FIND THAT HOBLE DELHI HIGH COURT IN ITA 1111/2010 IN T HE MATTER OF DHINGRA METAL WORKS VS. CIT, IN ITS ORDER DATED 04.10.2010 HAS HELD THA T SECTION 133A OF THE INCOME TAX ACT, 1961 (ACT), CONCERNING SURVEY, DOES NOT EMPOWE R THE I-T AUTHORITY, CARRYING ON THE SURVEY, TO ADMINISTER OATH AND RECORD SWORN STA TEMENT. I FURTHER FIND THAT HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. S. KHADER KHAN (2008) 300 ITR 157 (MAD), HAS LAID DOWN THE FOLLOWING PRINCIPLES ON THE MATTE R. ACCORDING TO THE COURT: (I) AN ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE, BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE AND IT IS OPEN TO THE PERSON, WHO MADE THE ADMISSIONS TO SHOW THAT IT IS INCORRECT AN D TD HE ASSESSEE SHOULD BE GIVEN A PROPER OPPORTUNITY TO SHOW THAT T HE BOOKS OF ACCOUNTS DO NOT CORRECTLY DISCLOSE THE CORRECT STAT E OF FACTS, VIDE DECISION OF THE APEX COURT IN PULKNGODE RUBBER PROD UCE CO. LTD. VS STAT E OF KERALA [1973] 91 ITR 18. (II) IN CONTRADICTION TO THE POWER UNDER SECTION 13 3A, SECTION 132(4) OF THE INCOME TAX ACT ENABLES THE AUTHORIZED OFFICER T O EXAMINE A PERSON ON OATH AND ANY STATEMENT MADE BY SUCH PERSO N DURING SUCH EXAMINATION CAN ALSO BE USED IN EVIDENCE UNDER THE INCOME TAX ACT. ON THE OTHER HAND, WHATEVER STATEMENT IS RECORDED U NDER SECTION 133A OF THE INCOME TAX ACT IS NOT GIVEN ANY EVIDENT IARY VALUE OBVIOUSLY FOR THE REASON THAT THE OFFICER IS NOT AU THORIZED TO ADMINISTER OATH AND TO TAKE ANY SWORN STATEMENT WHICH ALONE HA S EVIDENTIARY VALUE AS CONTEMPLATED UNDER LAW, VIDE PAUL MATHEWS AND SONS VS. CIT [2003] 263 ITR 101 (KER.) (III) THE EXPRESSION SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILABLE WITH THE ASSESSING OFFICER CONTAINED IN SECTION 158BB OF THE INCOME TAX ACT, 1961, WOULD INCLUDE THE MATERI ALS GATHERED DURING THE SURVEY OPERATION UNDER SECTION 133A, VID E CIT VS. G.K. SENNIAPPAN [2006] 284 ITR 220 (MAD). (IV) THE MATERIAL OR INFORMATION FOUND IN COURSE OF SURVEY PROCEEDING COULD NOT BE A BASIS FOR MAKING ANY ADDITION IN THE BLOCK ASSESSMENT, VIDE DECISION OF THIS COURT IN TC(A) NO.2620 OF 20 06 (BETWEEN CIT VS. S. AJIT KUMAR [2008] 300 ITR 152 (MAD). (V) FINALLY, THE WORD MAY USED IN SECTION 133A(3 )(III) OF THE ACT, VIZ, RECORD THE STATEMENT OF ANY PERSON WHICH MAY BE USE FUL FOR, OR RELEVANT TO, ANY PROCEEDINGS UNDER THIS ACT , AS ALREADY EXTRACTED ITA NO.156/GAU/2017 & CO 02/GAU/2017 A.Y. 20 13-14 ACIT, CIR-1DBR VS. M/S BRAHMAPUTRA DIAGNOSTICS & HOSPITAL LTD. PAGE 3 ABOVE, MAKES IT CLEAR THAT THE MATERIALS COLLECTED AND THE STATEMENT RECORDED DURINGZ THE SURVEY UNDER SECTION 133A ARE NOT CONCLUSIVE BY ITSELF. THE ABOVE CITED JUDGMENT OF THE HONBLE MADRAS HIGH COURT WAS CONFIRMED BY HONBLE SUPREME COURT IN CIT VS. S. KHADER KHAN SON (2013) 352 ITR 480 (SC). BESIDES, SIMILAR VIEWS HAVE BEEN TAKEN BY HONBLE A LLAHABAD HIGH CURT IN THE MATTER OF ABDUL QUAYMAME VS. CIT 184 ITR 404 ()ALL) AND HO NBLE KERALA HIGH COURT IN THE MATTER OF PAUL MATHEWS & SONS VS. CIT (2003) 263 IT R 101. IT IS ALSO FOUND THAT CBDT CIRCULAR NO. 286/2/2003-IT (INV) DATED 10.03.2 003 READ AS FOLLOWS:- INSTANCES HAVE COME TO THE NOTICE OF THE BOARD WHE RE ASSESSEES HAVE CLAIMED THAT THEY HAVE BEEN FORCED TO CONFESS THE U NDISCLOSED INCOME DURING THE COURSE OF THE SEARCH & SEIZURE AND SURVEY OPERA TIONS. SUCH CONFESSIONS, IF NOT BASED UPON CREDIBLE EVIDENCE, ARE LATER RETR ACTED BY THE CONCERNED ASSESSEES WHILE FILING RETURNS OF INCOME. IN THESE CIRCUMSTANCES, ON CONFESSIONS DURING THE COURSE OF SEARCH & SEIZURE A ND SURVEY OPERATIONS DO NOT SERVE ANY USEFUL PURPOSE. IT IS, THEREFORE, ADV ISED THAT THERE SHOULD BE FOCUS AND CONCENTRATION ON COLLECTION OF EVIDENCE O F INCOME WHICH LEADS TO INFORMATION ON WHAT HAS NOT BEEN DISCLOSED OR IS NO T LIKELY TO BE DISCLOSED BEFORE THE INCOME TAX DEPARTMENTS. SIMILARLY, WHILE RECORDING STATEMENT DURING THE COURSE OF SEARCH IT SEIZURES AND SURVEY OPERATIONS NO ATTEMPT SHOULD BE MADE TO OBTAIN CONFESSION AS TO THE UNDIS CLOSED INCOME. ANY ACTION ON THE CONTRARY SHALL BE VIEWED ADVERSELY. F URTHER, IN RESPECT OF PENDING ASSESSMENT PROCEEDINGS ALSO, ASSESSING OFFI CERS SHOULD RELY UPON THE EVIDENCES/MATERIALS GATHERED DURING THE COURSE OF SEARCH/SURVEY OPERATIONS OR THEREAFTER WHILE FRAMING THE RELEVANT ASSESSMENT ORDERS. 5.1 IN THE PRESENT CASE THE DIRECTOR OF THE ASSESSE E COMPANY HAS RETRACTED THE STATEMENT GIVEN DURING THE COURSE OF SURVEY WHICH I S REPRODUCED BELOW: AT THE TIME OF SIGNING THE STATEMENT I WAS MENTALL Y DISTURBED AND TOTALLY TIRED DUE TO THREE DAYS LONG SURVEY IN THE HOSPITAL. MY T HEN CHARTERED ACCOUNTANT SHRI BINOD KUAMR KANOI FCA WAS AT JAIPUR AT THAT TI ME DIED SUDDENLY THERE ON 6 TH DECEMBER 2012 AND I BECAME HELPLESS AS I WAS NOT A BLE TO GET ANY ADVICE FROM HIM DUE TO HIS SUDDEN DEATH. I TOO WAS NOT MAINTAINING GOOD HEALTH AT THAT TIME. ON HEAVY PRESSURE BY THE SURVE Y TEAM AND IN ABSENCE OF ANY PROPER ADVICE FROM 0ANYONE I ROUGHLY DISCLOSED THE HOSPITAL INCOME AT RS.3.50 CRORES FOR THE FINANCIAL YEAR 2012-13. ON T HE BASIS OF LAST YEAR INCOME AND WITHOUT CONSIDERING THE DEPRECIATION ON FIXED ASSETS AND OTHER EXPENSES. ACCORDINGLY I AGREED TO PAY THE ADVANCE T AX ON ROUGHLY ESTIMATED INCOME OF RS.3.50 CRORES AND PAID. BUT ON FINALISAT ION OF BOOKS OF ACCOUNT AFTER RECONCILIATION OF ALL BANK TRANSACTIONS AND C HARGING OF DEPRECIATION ON FIXED ASSETS AND OTHER EXPENSES THE NET PROFIT AS P ER BOOKS OF ACCOUNT CAME TO RS.3,02,41,487/- AS ON 31 ST MARCH, 2013. THE BOOKS WERE DULY AUDITED BY THE CHARTERED ACCOUNTANT. WHILE PAYING THE ADVANCE TAX ON ESTIMATED INCOME I DID NOT CONSIDER MAT CREDIT OF RS.15,12,91 4/- AND TDS OF RS.24,27,760/- AS THE SAME WAS NOT POSSIBLE FOR MEA T THAT LATE HOURS OF SURVEY AS I WAS NOT TOTALLY MENTALLY FIT DURING THA T TIME. THUS I DEPOSITED MORE ADVANCE TAX FOR THE ASSESSMENT YEAR 2013-14. IN VIE W OF ABOVE FACT, I REQUEST YOU TO ACCEPT THE ACTUAL BOOK RESULT S OF R S.3,02,41,487/- IN PLACE OF ESTIMATED INCOME OF RS.3,50,00,000/- 5.2 THOUGH THE AO HAS MENTIONED THAT BASED ON MATER IAL ON RECORDS AND STATEMENT RECORDED DURING THE SURVEY U/S. 133A THE INCOME OF THE ASSESSEE SHOULD BE AT LEAST RS.4,72,60,119/-. HOWEVER THIS IS A VERY GENERAL ST ATEMENT AND HE HAS NOT CORROBORATE DE THE AMOUNT OF RS.4,72,60,119/- WITH ANY MATERIALS AVAILABLE IN HIS ITA NO.156/GAU/2017 & CO 02/GAU/2017 A.Y. 20 13-14 ACIT, CIR-1DBR VS. M/S BRAHMAPUTRA DIAGNOSTICS & HOSPITAL LTD. PAGE 4 RECORDS EXCEPT ONLY STATEMENT GIVEN AT THE TIME OF SURVEY AND LATER ON RETRACTED BY THE DIRECTOR OF THE COMPANY. THE AO HAS NOT REFERRE D TO ANY CORROBORATIVE EVIDENCE. IT IS SETTLED POSITION OF LAW THAT NO ADDITION CAN BE LEGALLY MADE MERELY ON A STATEMENT WITHOUT ANY CORROBORATIVE INCRIMINATING E VIDENCE. OTHER OBSERVATION OF THE AO THAT THE ACCOUNTS WERE DEFINITELY COMPLETE AT TH E TIME OF SURVEY ALSO DOES NOT HOLD GROUND BASED ON THE FACT THAT THE SURVEY WAS C ONDUCTED FROM 5 TH TO 7 TH DECEMBER, 2012 AND AS NOTED IN THE REPLY TO QUESTIO N 4, BY THAT TIME BOOKS OF ACCOUNTS WERE UPDATED TILL 30.09.2012 ONLY. SECONDL Y WHEREAS DATE OF SURVEY WAS 5 TH TO 7 TH DECEMBER ACCOUNTING PERIOD FOR AY 2013-14 WAS TILL 31.03.2013. HE ALSO IGNORED THE FACT THAT THE ACCOUNTS WERE AUDITED BY A QUALIFIED CHARTERED ACCOUNTANT AND A PROFIT OF RS.3,03,12,932/- WAS EARNED AND CON SEQUENTLY OFFERED FOR TAXATION. THE AO DID NOT POINT OUT ANY MISTAKE OR DEFECT IN T HE AUDITED ACCOUNTS, NOR DID HE REJECT THE BOOKS OF ACCOUNTS. HE DID NOT EVEN FIND OUT ANY UNACCOUNTED INVESTMENT OR EXPENDITURE. JURISDICTIONAL GUWAHATI HIGH COURT IN THE MATTER OF MADANI CONSTRUCTION CORP 296 ITR 45 (GAU) HAS HELD THAT, THE ACCOUNTS WHICH ARE REGULARLY MAINTAINED IN THE COURSE OF BUSINESS AND ARE DULY AUDITED, FREE F ROM ANY QUALIFICATION BY THE AUDITORS SHOULD NORMALLY BE TAKEN AS CORRECT UNLESS THERE ARE ADEQUATE REASONS TO INDICATE THAT THEY ARE INCORRECT OR UNRELIABLE. THE ONUS IS ON THE REVENUE TO SHOW THAT EITHER THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSE SSEE WERE INCORRECT OR INCOMPLETE OR THAT THE METHOD OF ACCOUNTING ADOPTED BY HIM WAS SUCH THAT TRUE PROFITS CANNOT BE DEDUCED THEREFROM. WITHOUT BRINGING ON RECORD ANY CORROBORATIVE EVIDENCE THE AO HAS RELIED SOLELY ON THE STATEMENT OBTAINED DURING SURVEY OPERATION, WHICH IN THE OPINION OF VARIOUS APPELLATE AUTHORITI ES HAS NO EVIDENTIARY VALUE AND ALSO WAS RETRACTED BY THE DIRECTOR IN COURSE OF ASSESSME NT PROCEEDING. THE AO HAS WORKED OUT TOTAL INCOME OF RS.4,72,60,119/- FOR AY 2013-14 MERELY ON HYPOTHESIS AND WITHOUT ANY REASONING. HE HAS TAKEN INCOME FOR AY 2012-13 AMOUNTING TO RS.1,22,60,119/- AND ADDED RS.3,50,00,00/- TO IT, W HICH AS PER HIM WAS ADMITTED BY DIRECTOR OF COMPANY IN HIS STATEMENT AS CURRENT YEA RS INCOME OVER AND ABOVE PREVIOUS YEARS INCOME. HOWEVER GIVEN ANY REBUTTAL TO THE REASONS GIVEN BY THE DIRECTOR FOR RETRACTING THE STATEMENT. BESIDES, HE HAS NOT POINTED OUT ANY DISCREPANCY IN THE AUDITED ACCOUNTS NOR HAS HE CORR OBORATED HIS ADDITION WITH MATERIALS AVAILABLE ON RECORDS. 6. IN LIGHT OF THE FOREGOING DISCUSSIONS AND FINDIN GS AND RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY HONBLE MADRAS HIGH COURT IN THE MATTE R OF S. KHADER KAHN (2008) 300 ITR 157 (MAD), LATER CONFIRMED BY APEX COURT IN CIT V. S. KHADER KHAN SON (2013) 352 ITR 480 (SC) AND ALSO RELYING ON THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE MATTER OF MADANI CONSTRUCTION CORP 296 ITR 45 (GAU ), I HOLD THAT THE ACTION OF THE AO IN MAKING ADDITION OF RS.1,69,47,189/- ONLY ON THE BASIS OF STATEMENT OF THE DIRECTOR OF THE ASSESSEE COMPANY, IS CONTRARY TO TH E SETTLED LAW AND IT IS NOT SUSTAINABLE IN LAW. ACCORDINGLY THE ADDITION OF RS. 1,69,47,18899/- MADE BY THE AO IS DELETED. ACCORDINGLY THE GROUND NO. 1 & 2 OF THE AP PEAL ARE ALLOWED. IT IS SUFFICIENTLY CLEAR FROM THE CIT(A)S ABOVE EX TRACTED FINDINGS THAT THE DEPARTMENT HAD MADE THE IMPUGNED ADDITION IN ASSESS EE-FIRMS HANDS GOING BY HIS SURVEY STATEMENT NOWHERE SUPPORTED BY ANY MA TERIAL FOUND OR SEIZED. APART FROM VARIOUS JUDICIAL PRECEDENT QUOTED IN CIT (A)S ORDER (SUPRA). THERE IS HARDLY ANY DISPUTE THAT THE CBDT ITSELF HAS ISSU ED VARIOUS CIRCULARS DATED 10.03.2003 REITERATED ON 18.12.2014 THAT SUCH SEARC H OR SURVEY STATEMENTS IN ABSENCE OF ANY SPECIFIC EVIDENCE ADMITTING THE UNDI SCLOSED INCOME DO NOT ITA NO.156/GAU/2017 & CO 02/GAU/2017 A.Y. 20 13-14 ACIT, CIR-1DBR VS. M/S BRAHMAPUTRA DIAGNOSTICS & HOSPITAL LTD. PAGE 5 CARRY WEIGHT. WE THEREFORE DECLINE REVENUES INSTAN T SOLE SUBSTANTIVE GROUND AS WELL AS MAIN APPEAL ON THIS COUNT ALONE. THE ASS ESSEE DOES NOT PRESS FOR ITS CROSS OBJECTION DURING THE COURSE OF HEARING. 4. THIS REVENUES APPEAL ITA NO.156/GAUI/2017 IS DI SMISSED WHEREAS ASSESSEES CROSS-OBJECTION NO.S 02/GAU/2017 IS DISM ISSED AS NOT PRESSED. ORDER PRONOUNCED IN THE OPEN COURT 12 /07/2019 SD/- SD/- ( $) (&' $) ( A.L.SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) GUWAHATI, *DKP (- 12/ 07 /201 9 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ACIT, CIR-1, C.R. BUILDING, DIBRUGARH-78 6003 2. /RESPONDENT-M/S BRAHMAPUTRA DIAGNOSTICS & HOSPITAL LTD., PALTAN BAZAR, DIBRUGARH 3. 3 4 9 / CONCERNED CIT GUWAHATI 4. 4- / CIT (A) GUWAHATI 5. < ''3, 3, 9 / DR, ITAT, GUWAHATI 6. B / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY (ON TOUR) 3,