The ACIT, Circle-6, Surat V. M/s. Parshwa Enterprises, Surat

ITA 1663/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1408 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 31-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 20-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P CHAUDHARY
• Assessee Lawyers: KK SHAH
• Keywords: Unexplained investment; Income from undisclosed sources; Retraction
• Section: 143(3); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: S H RI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER THE ACIT, CIRCLE - 6, SURAT. ROOM NO. 607, AAYAKAR BHAVAN, MAJURA GATE, SURAT (APPELLANT) VS M/S. PARSHWA ENTERPRISES, TEN ROAD, BARDOLI, DISTT. - SURAT PAN: AAJFP2414N (RESPONDENT) REVENUE BY : S H RI O.P. CHAUDHARY , S R. D . R. ASSESSEE BY: S H RI K.K. SHAH , A.R. DATE OF HEARING : 31 - 05 - 2 016 DATE OF PRONOUNCEMENT : 09 - 06 - 2 016 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THIS REVENUE S APPEAL FOR A.Y. 2008 - 09 , AR ISES FROM ORDER OF THE CIT(A) - IV, SURAT DATED 28 - 03 - 2011 IN APPEAL NO. CAS - IV/190/10 - 11, DELETING UNACCOUNTED INCOME ADDITION OF RS. 1,59,17,275/ - MADE BY THE ASSESSING OFFICER IN ASSESSMENT ORDER DATED 21 - 12 - 2010 AS BASED ON ASSESSEE S PARTNERS STATEMENTS I T A NO . 1663 / A HD/20 1 1 A SSESSMENT YEAR 200 8 - 09 I.T.A NO. 1663 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. M/S. PARSHWA ENTERPRISES 2 MADE DURING SURVEY, IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE - FIRM IS IN BUILDING AND CONSTRUCTION BUSINESS. THE DEPARTMENT CARRIED OUT A SURVE Y IN ITS CASE ON 30 - 01 - 2008 AT ITS SITE/PREMISES. IT RECORDED STATEMENTS OF ASSESSEE S PARTNERS S/SH MANISH K. KAPADIA AND BHAVESH PATEL DISCLOSING UNACCOUNTED INCOME IN QUESTION OF RS. 2,35,27,525/ - . THE ASSESSEE FILED RETURN ON 17 - 09 - 2008 ADMITTING INC OME OF RS. 89,13,315/ - . THE ASSESSING OFFICER TOOK UP SCRUTINY AND NOTICED THE ASSESSEE TO HAVE OFFERED UNACCOUNTED INCOME OF RS. 76,10,250/ - THEREBY RETRACTING FROM THAT DISCLOSED DURING SURVEY TO THE TUNE OF RS. 1,59,17,275/ - . THE ASSESSEE INTER ALIA P LEADED THAT ITS PARTNERS STATEMENTS WERE BASED ON MERE ESTIMATION AND INCORRECT WORKING OF EXPENDITURE, FILED RETRACTION AFFIDAVIT AND RETREATED THAT THE SURVEY STATEMENT IN QUESTION DID NOT HAVE ANY EVIDENTIARY VALUE. THE ASSESSING OFFICER IN ASSESSMENT ORDER REJECTED THE SAME. HE OBSERVED THAT ASSESSEE S PARTNERS STATEMENTS HAVE B EEN MADE WITHOUT ANY DISTRESS OR COERCION, NO RETRACTION HAD BEEN COMMUNICATED TO DEPARTMENT AUTHORITIES, ITS PARTNERS HAD EXCLUSIVE KNOWLEDGE ABOUT ITS UNACCOUNTED INCOME AN D THERE WAS NO MATERIAL ON RECORD TO ESTABLISH THAT THEIR STATEMENTS WERE NOT CORRECT AS PER ITS FINANCIAL AFFAIRS ON THE SAID DATE. HE ACCORDINGLY ADDED THE IMPUGNED REMAINING SUM OF RS. 1,59,17,275/ - AS ASSESSEE S UNACCOUNTED INCOME DISCLOSED DURING SUR VEY. I.T.A NO. 1663 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. M/S. PARSHWA ENTERPRISES 3 3. THE CIT(A) DELETES THE IMPUGNED ADDITION BY HOLDING AS FOLLOWS: - 4. I HAVE GONE THROUGH THE FACTS OF THE CASE, ASSESSMENT ORDER AND SUBMISSIONS OF THE APPELLANT'S AUTHORIZED REPRESENTATIVE BEFORE ME. IT IS SEEN THAT THE ADDITION WAS MADE MEREL Y BECAUSE THE PARTNER OF THE FIRM HAD DISCLOSED RS.2,35,27,525/ - IN HIS STATEMENT DURING THE SURVEY PROCEEDINGS. THE APPELLANT NOT ONLY RETRACTED THE STATEMENT (IN PART) REGARDING DISCLOSURE OF INCOME IN THE SURVEY PROCEEDINGS BUT ALSO EXPLAINED WHY THE RE TRACTION WAS JUSTIFIED. DURING THE SURVEY PROCEEDINGS, AN ESTIMATE OF EXPENDITURE TOWARDS DEVELOPMENT AND CONSTRUCTION OF THE PROJECT WAS MADE AT RS.4.20 CRORES AND DISCLOSURE OF RS.2,35,27,525/ - WAS WORKED OUT TAKING INTO ACCOUNT THE CONSTRUCTION EXPENSES INCURRED TILL THE DATE OF SURVEY DURING FINANCIAL YEAR 2007 - 08 (A.Y. 2008 - 09) ONLY. WHILE MAKING THE RETRACTION OF INCOME IT WAS EXPLAINED THAT THE EXPENSES TOWARDS DEVELOPMENT AND CONSTRUCTION IN THE FINANCIAL YEAR 2006 - 07 (A.Y. 2007 - 08) OF - RS.2,19,95,3 03/ - WHICH WAS ALREADY ON THE RECORDS OF THE DEPARTMENT BY WAY OF RETURN OF INCOME AND ACCOMPANYING AUDITED ACCOUNTS HAD NOT BEEN TAKEN INTO CONSIDERATION. FURTHER, THE SURVEY PROCEEDINGS CONTINUED THROUGH THE WHOLE NIGHT DESPITE NOT A SINGLE INCRIMINATING DOCUMENT OR LOOSE PAPER BEING FOUND, ONLY SUPPORTS THE CLAIM OF THE APPELLANT THAT THE DISCLOSURE WAS NOT VOLUNTARILY MADE. IT IS SEEN FROM THE STATEMENT QUESTION /ANSWER NO.26 THAT NEITHER THE QUESTION NOR THE ANSWER GIVEN BY THE PARTNER SHRI MANISH KIRT ILAL KAPADIA STATES THAT EXPENDITURE OF RS.4.20 CRORES ESTIMATED ON DEVELOPMENT AND CONSTRUCTION WAS RELATING TO THE CURRENT YEAR ONLY AND NOT TO THE PROJECT AS A WHOLE. ON THE CONTRARY THE WORDS USED ARE 'TILL THIS DATE' WHICH WOULD NORMALLY SIGNIFY THE P ROJECT AS A WHOLE. THERE IS NO BASE EVEN FOR EXPENDITURE OF RS.4.20 CRORES FOR THE WHOLE PROJECT EXCEPT THE STATEMENT OF THE APPELLANT. NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SURVEY AND NONE HAS BEEN BROUGHT ON RECORD DURING ASSESSMENT PR OCEEDINGS. THE OBSERVATIONS OF THE A.O. THAT THE RETRACTION WAS BROUGHT TO THE NOTICE OF THE DEPARTMENT AFTER 2 1/ 2 YEARS IS NOT CORRECT AS THE RETRACTION WAS MADE IN THE RETURN OF INCOME BY WAY OF OFFERING LOWER THAN DISCLOSED INCOME AND THE RETURN WAS FI LED ON 17.09.2008, I.E. 7 MONTHS AFTER DATE OF SURVEY. 4.1. IT HAS BEEN HELD IN CERTAIN DECISIONS THAT STATEMENT RECORDED U/S. 131 HAS NO EVIDENTIARY VALUE AS IT IS RECORDED IN ABSENCE OF I.T.A NO. 1663 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. M/S. PARSHWA ENTERPRISES 4 WITNESSES. IN OTHER JUDGMENTS, IT IS HELD THAT STATEMENTS HAVE E VIDENTIARY VALUE BUT IS NOT CONCLUSIVE EVIDENCE AND IN THE EVENT OF RETRACTION OF ANY ADMISSION, THE STATEMENT CAN BE USED ONLY IF CORROBORATED BY OTHER EVIDENCES. NO COGENT EVIDENCE HAS BEEN SHOWN TO EXIST WHICH WOULD ESTABLISH THE EXISTENCE OF UNEXPLAINE D INVESTMENT BY THE APPELLANT OTHER THAN THE RETRACTED STATEMENT. NO INCRIMINATING DOCUMENTS SHOWING EVIDENCE OF UNEXPLAINED INVESTMENT OR RECEIPT OF ON MONEY ON SALE OF BUNGALOWS HAS BEEN UNEARTHED DURING SURVEY. EVEN AFTER RETRACTION OF STATEMENT (IN PAR T), THE A.O. DID NOT MAKE ANY ATTEMPT DURING THE ASSESSMENT PROCEEDINGS TO COLLECT EVIDENCE OF UNEXPLAINED INVESTMENT OF THE APPELLANT SO AS TO COUNTER THE REASON GIVEN FOR RETRACTION. NO ADDITION CAN BE MADE SIMPLY ON THE BASIS OF STATEMENT RECORDED IN SU RVEY/SEARCH PROCEEDINGS, MORE SO WHEN IT HAS BEEN RETRACTED AND JUSTIFIABLE REASONS FOR RETRACTION ARE OFFERED. THE DECISION OF THE JURISDICTIONAL HIGH COURT AND THE TRIBUNAL IN THE CASE OF RATAN CORPORATION, NIRMAL TEXTILES, PRAMUKH BUILDERS, KAILASHBEN M ANHARLAL CHOKSI AND ASHOK MANILAL THAKKAR ALL SUPPORT THE CASE OF THE APPELLANT THAT NO ADDITION TO INCOME CAN BE MADE ONLY ON THE BASIS OF DISCLOSURE IN STATEMENT WITHOUT THERE BEING ANY EVIDENCE/MATERIAL FOUND TO PROVE ITS EXISTENCE. BOARD'S INSTRUCTIONS DATED 10 TH MARCH, 2003 ISSUED IN RESPECT OF 'CONFESSION OF ADDITIONAL INCOME DURING THE COURSE OF SEARCH & SEIZURE AND SURVEY OPERATION' GOES TO THE EXTENT OF DIRECTING THE AO TO RELY UPON THE EVIDENCE/MATERIAL GATHERED DURING THE SEARCH/SURVEY OPERATION WHILE FRAMING ASSESSMENT. THEREFORE ADDITION MADE SOLELY ON THE BASIS OF STATEMENT RECORDED DURING SURVEY, WHICH WAS SHOWN BY THE APPELLANT TO HAVE BEEN MADE ON THE BASIS OF MISTAKEN BELIEF OF FACTS, CANNOT BE JUSTIFIED WHEN NO INQUIRIES HAVE BEEN DONE BY THE A.O. TO SHOW THAT THE INCOME OFFERED IN THE RETURN OF INCOME OR THE BASIS OF RETRACTION WAS NOT CORRECT. THE ADDITION MADE IS THEREFORE DELETED. 4. WE HAVE HEARD BOTH THE PARTIES. CASE FILE PERUSED. THE REVENUE STRONGLY SEEKS TO RESTORE THE IMPUGN ED UNACCOUNTED INCOME ADDITION OF RS. 1,59,17, 275/ - AS MADE BY THE ASSES SING OFFICER SOLELY BASED ON AS SESSEE S PARTNERS STATEMENTS RECORDED DURING SURVEY. LEARNED AUTHORIZED R EPRESENTATIVE TAKES US TO THE I.T.A NO. 1663 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. M/S. PARSHWA ENTERPRISES 5 LOWER APPELLATE FINDINGS EXTRACTED HEREINABOVE H OLDING THAT NOT A SINGLE INCRIMINATING DOCUMENT OR EVIDENCE OR LOOSE SHEET HAS BEEN FOUND. WE P UT A SPECIFIC QUERY TO THE LEARNED DEPARTMENTAL R EPRESENTATIVE TO PLACE ON RECORD ANY EVIDENCE OR MATERIAL OTHER THAN STATEMENTS OF ASSESSEE S PARTNERS SUPPORTI VE OF THE IMPUGNED ADDITION. HE REPLIED IN NEGATIVE. WE ARE OF THE OPINION IN THESE PECULIAR FACTS AND CIRCUMSTANCES THAT THE IMPUGNED ADDITION BASED ON MERE SURVEY STATEMENT IS NOT SUSTAINABLE. A CATENA OF CASE LAW AS DISCUSSED HEREINABOV E SUPPORTS THE SAME VIEW. THE R EVENUE FAILS TO POINT OUT ANY DISTINCTION ON FACTS OR LAW THEREIN. WE AFFIRMS CIT(A) S FINDINGS UNDER CHALLENGE ACCORDINGLY. 5. THIS REVENUE S APPEAL IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 09 - 06 - 201 6 SD/ - SD/ - ( PRAMOD KUMAR ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 09 /06 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , I.T.A NO. 1663 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. M/S. PARSHWA ENTERPRISES 6 / ,