M/s. Alert India, Delhi V. ACIT, New Delhi

ITA 1777/DEL/2016

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 4122 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 05-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained investment; Opportunity of being heard; Corroborative evidences; Retraction
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E , NEW DELHI BEFORE SMT. DIVA SINGH , JUDICIAL M EMBER AND SHRI O.P. KANT , ACCOUNTANT MEMBER ITA NO .1777 /DE L/ 2016 ASSESSMENT YEAR: 2011 - 12 M/S. ALERT INDIA, C - 1, SMA INDUSTRIAL ESTATE, G.T. KARNAL ROAD, DELHI VS. ACIT, CIRCLE - 19(1), NEW DELHI PAN : AAAFA4467H (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER DATED 18/01/2016 PASSED BY THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - 32, NEW DELHI [IN SHORT THE LD. CIT(A)] FOR ASSESSMENT YEAR 2011 - 12 , RA I SING FOLLOWING GROUNDS: THE LD CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS 91,37,456/ - ON ACCOUNT OF MACHINERY SURRENDERED DURING THE SURVEY IGNORING THE FACTS (A) DURING THE SURVEY, THE OFFICER FOUND 6 NEW MACHINES AND 20 MOULDS IN THE FACTORY FOR WHICH DOCUMENTS WERE NOT AVAILABLE. AS THE MACHINES WERE RECEIVED ON THE DATE OF APPELLANT BY S/SH. K. SAMPATH & RAJ KUMAR, ADVOCATES RESPONDENT BY SH. S.R. SENAPATI, SR.DR DATE OF HEARING 21.08.2018 DATE OF PRONOUNCEMENT 12.10.2018 2 ITA NO.1777/DEL/2016 SURVEY AND WERE PENDING FOR INSTALLATIONS THEY ARE YET TO GET BILLS AND HAVE ALSO NOT MADE PAYMENTS. (B) THAT DUE TO PRESSURE AT THE TIME OF SURVEY, THE ASSESSEE RELUCTANTLY SURRENDERED RS. 91,37,456/ - BEING THE VALUE OF MACHINES (YET TO BE INSTALLED) AND MOULDS FOR WHICH BILLS WERE YET TO BE RECEIVED. (C) THAT SUBSEQUENTLY THE BILLS WERE REC EIVED, HOWEVER THE MACHINES DID NOT WORK PROPERLY, THESE WERE RETURNED TO VENDOR; AND THE PAYMENTS OF MOULDS, FREIGHT WERE MADE BY THE ASSESSEE. (D) DURING THE ASSESSMENT PROCEEDINGS, THE LD. ACIT HAS MADE ADDITIONS OF RS. 91,37,456/ - BEING THE VALUE OF M ACHINERIES ON THE BASIS OF STATEMENT TAKEN UNDER PRESSURE AT THE TIME OF SURVEY CARRIED OUT ON 01.10.2010 WITHOUT GIVING ADEQUATE OPPORTUNITY TO THE ASSESSEE AND NO ENQUIRIES WERE CONDUCTED BEFORE CONCLUDING THE ADDITIONS. (E) THAT THE LD. AO HAD MADE NO EFFORT/ENQUIRY ABOUT THE GENUINENESS OF THE FACTS AND JUST WENT ON TO CONCLUDE THAT THE SUBMISSIONS MADE BY THE ASSESSEE IS NOTHING BUT AN AFTERTHOUGHT OF THE ASSESSEE. 2. B RIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE, A PARTNERSH IP FIRM WAS CON STITUTED BY TWO PARTNERS , NAMELY , SH. ASHWINI KUMAR SACHDEVA AND SMT. PUJA SACHDEVA HAVING PROFITS SHARING RATIO OF 80% AND 20%. THE FIRM WAS ENGAGED IN THE MANUFACTURING OF FOOTWEAR SOLES. IN THE CASE OF THE ASSESSEE, A SURVEY OPERA TION UNDER SECTION 133 A OF THE INCOME - TAX A CT, 1961 (IN SHORT THE A CT ) WAS CARRIED OUT ON 01/10/2010, WHEREIN THE ASSESSEE OFFERED INCOME OF RS. 1,30,19,418/ - FOR TAXATION, WHICH INCLUDED UNEXPLAINED CASH OF RS.9,25,018 / - ; PURCHASE OF MACHINERY OUTSIDE BOOKS OF RS.91,37, 456/ - AND UNEX PLAINED SUNDRY CREDITORS OF RS. 29,56,944/ - . FOR THE YEAR UNDER 3 ITA NO.1777/DEL/2016 CONSIDERATION, THE ASSESSEE FILED RETURN OF INCOME ON 30/09/2011, DECLARING TOTAL INCOME OF RS.1, 09, 67, 480/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTI CE UNDER SECTION 143(2) OF THE A CT WAS ISSUED AND COMPLIED WITH. DURING ASSESSMENT PROCEEDING, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE RETRACTED HIS SURRENDER OF INCOME TO THE EXTENT OF PURCHASE OF MACHINE RIES OUTSIDE BOOKS MOUNTING RS.91,37, 456/ - . THE EXPLANATIO N OF THE ASSESSEE IN RESPECT OF THE SAID SURRENDER WAS NOT ACCEPTED BY THE ASSESSING OFFICER AND ASSESSMENT WAS COMPLET ED UNDER SECTION 143(3) OF THE A CT ON 31/01/2014 AFTER MAKING THE SAID ADDITION OF RS.91,37, 456, ALONG WITH OTHER DISALLOWANCES. AGGRIEVE D, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A), HOWEVER , COULD NOT SUCCEED AND , THUS , ASSESSEE IS IN APPEAL BEFORE THE T RIBUNAL , RAISING THE GROUNDS A S REPRODUCED ABOVE. 3. THE GROUNDS (A) TO (E) RAISED BY THE ASSESSEE ARE IN RESPECT OF THE ADDITION O F RS.91,37, 456/ - ON ACCOUNT OF MACHINERY SURRENDERED DURING THE COURSE OF SURVEY. 4. THE FACTS QUA THE ISSUE IN DISPUTE ARE THAT DURING THE COURSE OF SURVEY, THE SURVEY TEAM FOUND SIX NEW INJECTION MOULDING MACHINES AND 20 MOULDS IN THE FACTORY PREMISES FO R WHICH NO BILLS OR VOUCHERS WERE FOUND. DURING THE COURSE OF SURVEY STATEMENT OF THE PARTNER OF THE ASSESSEE FIRM, SRI ASHWINI , SACHDEVA WAS RECORDED , WHEREIN HE FAILED TO FURNISH SATISFACTORY EXPLANATION AS REGARD TO THE EXISTENCE OF THE ABOVE MACHINERI ES AND THUS HE SURRENDERED THE VALUE OF THE 6 IN JECTION MOULDING MACHINES (RS.14 LAKH EACH) AND 20 MOULDS (RS. 35 ,000 EACH ) ALONGWITH CARTAGE CHARGES (RS.37,756) TOTALLING TO RS.91,37, 456/ - . THE ASS ESSEE FIRM ALSO PAID TAX OF RS.40, 23,000/ - ON THE E NTIRE 4 ITA NO.1777/DEL/2016 S URRENDERED INCOME OF RS.1,30,19, 418/ - MADE DURING THE COURSE OF SURVEY OPERATION, WHIC H INCLUDED THE SURRENDER OF RS.91,37, 456/ - ALSO. 4.1 DURING ASSESSMENT PROCEEDING, THE ASSESSEE EXPLAINED THAT THE SAID SURRENDER WAS UNDER PRESSURE BY THE SURVEY TEAM AND IT WAS NOT A VOLUNTARILY SURRENDER. THE ASSESSEE SUBMITTED THAT 6 INJECTION MOULDING MACHINES WERE PURCHASED FROM M/S AMAN HYDRAULICS (IN DIA) , NEW DELHI , VIDE THEIR INVOICE NOS. 84 AND 87 DATED 01/10/2010. REGARDING 20 PVC MOULDS, THE ASSESSEE SUBMITTED THA T SAME WERE PURCHASED FROM M/S K ALYANI M OULD, MONGOL PURI, NEW DELHI VIDE INVOICE NUMBER 112 DATED 01/10/2010. THE ASSESSEE SUBMITTED TH AT THOSE MACHINES AND MOULDS WERE RECEIVED THROUGH MALLI K T RANSPORT C OMPANY. THE ASSESSEE EXPLAINED THAT THOSE INJECTING MOULDING MACHINES BROKE DOWN DURING TRIAL RUN AND COULD NOT BE REPAIRED SATISFACTORILY AND AS SUCH THOSE WERE SENT BACK. THE ASSESSEE S UBMITTED THAT SURRENDERED AMOUNT WAS WITHOUT ANY BASIS AND THE TAX PAID BY WAY OF CHEQUES AGAINST THE SURRENDER AMOUNT BY INCLUDING THE VALUE OF ABOVE MACHINERY , WAS ADJUSTED AGAINST THE ADVANCE TAX LIABILITY AND NO SEPARATE ADVANCE TAX WAS DEPOSITED. TH E ABOVE SUBMISSIONS OF THE ASSESSEE WERE NOT ACCEPTED BY THE ASSESSING OFFICER DUE TO REASONS SUMMARIZED AS UNDER: 1 . IN THE STATEMENT RECORDED, THE PARTNER OF THE FIRM MENTIONED THAT THE STATEMENT WAS GIVEN VOLUNTARILY WITHOUT ANY FEAR AND THUS THE CONTENTI ON THAT SAID SURRENDER WAS UNDER PRESSURE, WAS NOT ACCEPTABLE. 5 ITA NO.1777/DEL/2016 2 . THE ASSESSE E PAID INCOME TAX OF RS.40, 23,000/ - ON THE TOTAL SURRENDERED INCOME OF RS.1,30,19, 418/ - WITHOUT RAISING ANY OBJECTION. 3 . SRI ASHWANI KUMAR SACHDEVA, PARTNER OF THE FIRM COULD NOT EXPLAIN SATISFACTORY EXISTENCE OF THE ABOVE MACHINERY DURING THE COURSE OF SURVEY OPERATION AND HE VOLUNTARILY SURRENDERED THE ABOVE AMOUNT. 4 . THE SUBMISSION OF THE ASSESSEE JUSTIFYING PURCHASE OF THE MACHINERY WAS AN AFTERTHOUGHT AND NOT ACCEPTABLE. 4.2 ACCORDING TO THE ASSESSING OFFICER, THE PARTNER OF THE ASSESSEE FIRM COULD NOT SUBSTANTIATE AS HOW THE STATEMENT RECORDED DURING SURVEY PROCEEDINGS WAS NOT GENUINE AND NOT VOLUNTARILY. IN VIEW OF ABOVE FACTS, THE LEARNED ASSESSING OFFICER REJECTED THE CONT ENTION OF THE ASSESSEE AND HELD THAT STATEMENT OF THE PARTNER WAS WITHOUT ANY FEAR, PRESSURE OR COERCION, ACCORDINGLY MADE ADDITION OF RS.91,37, 456/ - . THE LD. CIT(A) WAS ALSO NOT CONVINCED WITH THE SUBMISSION OF THE ASSESSEE. HE REJECTED THE CONTENTION OF THE ASSESSEE THAT THE STATEMENT OF SRI SACHDEVA WAS RECORDED UNDER PRESSURE OBSERVING AS UNDER: THE ASSESSEE CLAIMED THAT THE STATEMENT OF SHRI SACHDEVA WAS RECORDED UNDER PRESSURE. EVEN FOR THE SAKE OF ARGUMENT, IF IT IS BELIEVED THAT SHRI SACHDEVA GAVE THE STATEMENT UNDER PRESSURE THEN WHY THE ASSESSEE PAID TAXES ON THE DISCLOSED INCOME? THE ASSESSEE DEPOSITED THE TAX BY CHEQUE, ASSESSEE HAS NOT CLAIMED THAT THE CHEQUES WERE TAKEN BY THE DEPARTMENT BY FORCE. FOR THE SAKE OF IMAGINATION EVEN IF IT IS ASS UMED THAT THE CHEQUES TOO WERE OBTAINED BY THE DEPARTMENT BY FORCE EVEN THEN THE ASSESSEE HAD SUFFICIENT TIME TO GET THE CLEARING OF THE 6 ITA NO.1777/DEL/2016 CHEQUE STOPPED BY WRITING A SIMPLE LETTER TO THE BANK. THE PARTNERS OF THE ASSESSEE FIRM WERE NOT CONFINED BY THE DEPAR TMENT AFTER THE SURVEY. 4.3 THE LD. CIT(A) ALSO REJECTED THE CONTENTION OF THE ASSESSEE THAT MACHINERY WERE RETURNED BACK TO THE SUPPLIER. THE OBSERVATION OF THE LD. CIT(A) IN THIS REGARD ARE REPRODUCED AS UNDER: THE ASSESSEE HAS FILED COPIES OF CORRESPOND ENCES WITH THE MANUFACTURER M/S AMAN HYDRAULICS. THE ASSESSEE VIDE IT'S LETTER DATED 18/10/2010 ADDRESSED TO NISHANT AHMED OF M/S AMAN HYDRAULIC HAS MENTIONED THAT IT HAD ORDERED THE INJECTION MACHINES IN JUNE 2010 AND THE MACHINES WERE SUPPOSED TO BE DELIVERED IN SEPTEMBER 2010. THE MACHINE WERE DELIVERED LATE ON 1/10/2010. IF THE MACHINES WERE TO BE DELIVERED IN SEPT 2010 AND HAD BEEN DELIVERED ON 1/10/2010 HOW CAN IT BE SAID LATE. 'ANY WAY IF THE ORDER WAS PLACED IN JUNE FOR MACHINERY WHICH APP EARS TO BE CUSTOM MADE FOR ASSESSEE. THE NORMAL BUSINESS PRACTICE DEMANDS THAT THE ASSESSEE MUST HAVE PAID SOME ADVANCE TO THE MANUFACTURER TO ENABLE THEM TO MAKE THE MACHINERY WHICH WAS WORTH RS.82 LAC. NO PRUDENT BUSINESSMAN WILL TAKE AN ORDER WITHOUT AD VANCE TO MANUFACTURE MACHINES AS PER SOMEBODY ELSE'S SPECIFICATION REQUIRING FABRICATION. BECAUSE IF THE MACHINE IS REJECTED BY THE BUYER THERE WILL NOT BE ANOTHER BUYER FOR THAT PRODUCT AND THE MANUFACTURER WILL SUFFER HUGE LOSSES. IT'S COMMON BUSINESS PR ACTICE EVEN IF SOMEONE WANTS TO BUY 10 KG OF SWEETS AND WANTS TO PLACE ORDER AT ANY SWEET SHOP, THE SHOPKEEPER WILL NOT TAKE ORDER UNLESS SUBSTANTIAL ADVANCE IS GIVEN. IN THIS CASE IT WAS A QUESTION OF RS 82 LAC. THE ASSESSEE CLAIMED THAT NO PAYMENT WHATS OEVER WAS MADE TO M/S. AMAAN HYDRAAULICS FOR SUPPLYING MACHINES WORTH RS.82 LAC. THAT M/S AMAAN HYDRAULICS SUPPLIED THE MACHINES AT THE ASSESSEE'S PR EMISES WITHOUT TAKING A 7 ITA NO.1777/DEL/2016 SINGLE P ENNY. IT ALLOWED THE ASSESSES TO INSTALL THE MACHINES AND TO START TRIAL P RODUCTION WITHOUT RECEIVING ANYTHING IN RETURN !! THE ASSESSEE FURTHER CLAIMS THAT THE MACHINES WERE FOUND TO BE FAULTY (THE PRODUCTION WAS LOW) HENCE THE ASSESSEE RETURNED IT WITHOUT ANY COST!! UNBELIEVABLE. 4.4 THE LD. CIT(A) WAS ALSO NOT SATI S FIED WITH THE SUBMISSION OF NO PRODUCTION RECORD IN RESPECT OF THE MACHINES IN DISPUTE. THE RELEVANT OBSERVATION OF THE LD. CIT(A) ARE REPRODUCED AS UNDER: SECONDLY THE ASSESSES WAS ASKED TO FURNISH PRODUCTION RECORDS OF THESE MACHINES TO VERIFY ASSESSEE S CLAIM THAT THE MACHINES HAD LOW YIELD. THE ASSESSEE CLAIMED THAT IT DID NOT KEEP MACHINE - WISE PRODUCTION RECORD (PARA - 5 OF SUBMISSION DATED 04.12.2015). IF THE ASSESSEE DID NOT MAINTAIN MACHINE - WISE PRODUCTION RECORDS THEN HOW CAN IT CLAIM THAT THE YIEL D OF THE MACHINES WERE LOW OR WERE NOT UP TO THE MARK? 4.5 F URTHER , THE LD. CIT(A) ANALYSED THE INTERNAL DOCUMENT OF THE ASSESSEE FIRM AND OBSERVED THAT ACCORDING TO SAID DOCUMENTS THE BILLS OF PURCHASE OF THE MACHINERY WERE CLEARED. THE RELEVANT FINDIN G OF THE LD. CIT(A) IS REPRODUCED AS UNDER: THIRDLY THE ASSESSEE HAS FILED COPY OF ITS INTERNAL DOCUMENT SCANNED HEREUNDER. ON THIS DOCUMENT IT HAS BEEN MENTIONED PARTY BILL PASSED AGAINST BILL NO. 87 OF 1/X/X . THIS CLEARLY SHOWS THAT THE MACHINES WERE RECEIVED AND BILLS WERE PASSED IMPLYING THEREBY PAYMENTS WERE DONE. 4.6 T HE LD. CIT(A) ALSO OBSERVED THAT FACT OF THE PURCHASE OF THE MACHINES AND RETURN THEREON WAS NOT RECORDED IN THE AUDITED 8 ITA NO.1777/DEL/2016 ACCOUNTS. THE R ELEVANT OBSERVATION OF THE LD. CIT(A) IS REPRODUCED AS UNDER: THE ASSESSEE HAS ALSO FILED COPY OF THE AUDITED ACCOUNTS. IN THE AUDI T REPORT IN THE FORM 3CD THE LIST OF ASSETS HAS BEEN GIVEN. IN THE LIST OF ASSETS ADDITION OF ASSETS UP TO 01/10/2010 AND ADDITION OF ASSETS AFTER 01/10/2010 HAS BEEN GIVEN. THESE MACHINES DO NOT FIND PLACE IN THE LIST OF ADDITIONS EITHER UPTO 01/10/2010 O R AFTER 01/10/2010. THE ASSESSEE ITSELF HAS ADMITTED THAT THE MACHINES WERE INSTALLED AND WERE PUT ON TRIAL PRODUCTION. THEN THE MACHINES SHOULD HAVE BEEN SHOWN IN THE LIST OF ADDITIONS UP TO 01/10/2010 OR IN THE LIST AFTER 01/10/2010. ON RETURN OF THE MAC HINES MACHINE ACCOUNT SHOULD HAVE BEEN CREDITED. 4.7 IN VIEW OF THE ABOVE ANALYSIS, THE LD. CIT(A) UPHELD THE ADDITION OBSERVING IS UNDER: IT IS THEREFORE HELD THAT THE ASSESSEE DID ACQUIRE MACHINES AND MOULDS WORTH RS.91,37,456/ - OUT OF ITS UNDISCLO SED INCOME. ONCE THE MACHINES WERE NOTICED IN THE SURVEY OPERATION, THE ASSESSEE DISCLOSED ADDITIONAL INCOME OF RS.91,37,456/ - AND PAID TAX ON THE DISCLOSED INCOME. LATER THE ASSESSEE TRIED TO AVOID PAYING TAXES BY CREATING THE STORY T HAT THE MACHINES WERE RETURNED AND NO PAYMENT WAS MADE TO THE MANUFACTURER. THE MACHINES WERE TAKEN AFTER MAKING PAYMENT FROM UNKNOWN SOURCES. NO FINDING IS BEING GIVEN ON WHAT HAPPENED AFTERWARDS WITH THE MACHINES. IF THE MACHINES WERE INDEED RETURNED THE ASSESSEE MIGHT HAVE RECEIVED A PART OF MONEY BACK FROM THE MANUFACTURER AS PER THE INDUSTRY NORM. INITIAL ACQUISITION OF MACHINERIES AND MOULDS WAS FROM UNDISCLOSED SOURCE OF INCOME. 5. BEFORE US, THE LEARNE D COUNSEL OF THE ASSESSEE RELIED ON THE SUBMISSION MADE BEFORE THE LD. ASSESSING OFFICER AND LD. CIT(A) 9 ITA NO.1777/DEL/2016 AND FILED COPY OF ALL THOSE SUBMISSIONS IN THE FORM OF PAPER - BOOK CONTAINING PAGES 1 TO 142. 6. THE LEARNED COUNSEL REFERRED TO PAGE 127 OF THE PAPER - BOOK, WHICH IS A P HOTO COPY OF THE OFFICE COPY OF LETTER DATED 20/10/2010 IS SUED BY PROPRIETOR OF M/S AMAN H YDRAULICS (INDIA). IN THIS LETTER, IT IS MENTIONED TH AT THE PROPRIETOR OF M/S AMAAN H YDRAUL ICS (INDIA) AGREED FOR RETURN OF MACHINES SUPPLIED BY HIM IN VIEW OF DEFAULTS IN THE MACHINES. THE LEARNED COUNSEL SUBMITTED THAT THIS IS ONE OF THE EVIDENCE THAT MACHINES WERE RETURNED BACK TO THE SUPPLIER. FURTHER, THE LEARNED COUNSEL REFERRED TO PAGE 1 0 TO 19 OF THE PAPERBOOK, WHICH ARE COPY OF THE STATEMENT OF SRI ASHWANI SACHDEVA , PARTNER OF THE ASSESSEE FIRM RECORDED ON 01/10/2010 DURING T HE COURSE OF SURVEY PROCEEDINGS . HE ALSO REFERRED TO PAGES 20 TO 24 OF THE PAPER - BOOK , WHICH ARE TYPED COPY OF T HE STATEMENT OF SRI SACHDEVA. HE SUBMITTED THAT IN RESPONSE TO QUESTION NO. 17 , SRI SACHDEVA STATED THAT HE HAD NOT GOT THE BILLS AND ALSO NOT MADE PAYMENT FO R THOSE MACHINES AND MOULDS ETC. , HOWEVER , THE AUTHORISED OFFICER WAS NOT SATISFIED WITH THE ANSWER OF SRI SACHDEVA AND HE AGAIN ASKED QUESTION NO. 18 TO EXPLAIN ABOUT THE MACHIN E RIES . IN RESPONSE THEREON, SH . SAC HDEVA SURRENDERED AMOUNT OF RS. 91,37,456/ - TO BUY THE PEACE OF MIND SUBJE CT TO NO PEN ALTY OR PROSECUTION . THE LEARNED COUNSEL FURTHER SUBMITTED THAT REFERRED STATEMENT WAS TAKEN AT MIDNIGHT OF 01/10/2010 , AND OBVIOUSLY TAKEN UNDER PRESSURE AND INTIMIDATION AND THUS CANNOT BE ALLOWED TO USE AS EVIDENCE AGAINST THE ASSESSEE. IN SUPPORT OF H IS CONTENTION THAT EVIDENCE RECORDED IN MIDDLE OF NIGHT CANNOT BE USED AGAINST THE ASSESSEE, HE RELIED ON THE DECISION OF THE HON BLE 10 ITA NO.1777/DEL/2016 HIGH COURT OF THE GUJARAT IN THE CASE OF KAIL A SHBEN MANHARLAL CHOKSHI VS CIT REPORTED IN 328 ITR 411. 7. HE FURTHER SU BMITTED THAT THE AUTHORISED OFFICER IS NOT EMPOWERED TO TAKE A STATEMENT ON OATH DURING THE COURSE OF SURVEY PROCEEDING AND THUS THE STATEMENT RECORDED DURING THE COURSE OF SURVEY PROCEEDING ON OATH CANNOT BE ADMITTED AS EVIDENCE WITHOUT CORROBORATING WITH OTHER EVIDENCES. IN THIS REGARD, THE LEARNED COUNSEL RELIED ON THE DECISION IN THE CASE OF S. KHADER KHAN SON REPORTED IN 352 ITR 480 (SC). THE LEARNED COUNSEL ALSO RELIED ON THE DECISION OF THE HON BLE HIGH COURT OF THE DELHI IN THE CASE OF DHINGRA METAL WORKS REPORTED IN 328 ITR 384 AND SUBMITTED THAT THE STATEMENT RECORDED DURING THE COURSE OF SURVEY IS NOT A CONCLUSIVE PIECE OF EVIDENCE. 8. THE LEARNED COUNSEL REFERRED TO PAGES 116 TO 142 OF THE PAPER BOOK, WHICH CONTAIN COPY OF LETTER FILED BEFORE THE ASSESSING OFFICER. ACCORDING TO THE LEARNED COUNSEL, THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER THAT DURING THE COURSE OF SURVEY, SH SACHDEVA STATED THAT BILLS OF THE MACHINES WERE NOT RECEIVED AND NO PAYMENT WAS MADE IN RESPECT OF THOSE MACH INES, BUT HOWEVER ON PRESSURISING, HE OFFERED TO SURRENDER THE AMOUNT IN RESPECT TO THE MACHINES AND MOULDS. HE SUBMITTED THAT THE ASSESSEE HAS SUBSTANTIATED THAT MACHINES ARE RETURNED BACK AND PAYMENT FOR MOULDS HAS BEEN MADE THROUGH CHEQUE SUBSEQUENTLY, AND THUS NO ADDITION WAS CALLED FOR IN RESPECT OF THOSE MACHINES AND MOULDS. 9. ON THE CONTRARY, THE LD. DR SUBMITTED THAT THE ALLEGATION OF PRESSURIZING THE PARTNER OF THE FIRM DURING THE COURSE OF SURVEY PROCEEDINGS IS FALSE AND WITHOUT ANY BASIS. ACCOR DING TO THE LEARNED DR, THE SURVEY TEAM WAS NOT HAVING ANY PE RSONAL ENMITY 11 ITA NO.1777/DEL/2016 WITH THE ASSESSEE , FOR WHICH THEY WOULD PRESSURIZE OR INTIMIDATE THE PARTNER OF THE ASSESSEE FIRM. HE SUBMITTED THAT IN NORMAL COURSE OF SURVEY PROCEEDING, ONCE SURVEY IS STARTED , IT IS CONTINUED ON DAY TO DAY BASIS AND THUS STATEME NT WAS RECORDED ON THE NEXT DAY . ACCORDING TO THE LEARNED DR , THE ALLEGATION OF RECORDING A STATEMENT UNDER PRESSURE AT MIDNIGHT OF 01/10/2010 ARE FALSE AND WITHOUT BASIS , AS SH. SACHDEVA IN HIS OWN HANDW RITING HAS WRITTEN AT THE END OF THE STATEMENT THAT HE HAD GIVEN ABOVE STATEMENT VOLUNTARILY WITHOUT ANY FEAR, THREAT AND COERCION. THE LD. DR ALSO SUBMITTED THAT SURVEY PROCEEDINGS ARE NORMALLY CARRIED OUT IN PRESENCE OF LOCAL WITNESSES BROUGHT BY THE TAX PAYER ONLY. 10. ON THE ISSUE OF OATH ADMINISTERED DURING THE STATEMENT RECORDED IN SURVEY PROCEEDINGS, THE LD. DR SUBMITTED THAT BY MERELY ADMINISTRATION OF THE OATH, THE FACTS RECORDED IN THE STATEMENT CANNOT GET CHANGED OR LOOSE ITS RELEVANCE , IF CORR OBORATED BY OTHER EVIDENCES. ON THE ISSUE OF RETRACTION, THE LEARNED DR SUBMITTED THE PARTNER OF THE FIRM SURRENDERED TOTAL INCOME OF MORE THAN RUPEES 1.3 CRORES INCLUDING THE SURRENDER AGAINST MACHINERY AND MOULD AND HE HONOURED THE CHEQUES OF RS. 40.23 L AKHS SUBMITTED DURING THE COURSE OF SURVEY PROCEEDING AGAINST THE TAX LIABILITY. ACCORDING TO HIM, THE ASSESSEE DID NOT RETRACT ED THE STATEMENT WITHIN A REASONABLE PERIOD AND THUS THE ALLEGATION OF MAKING A STATEMENT UNDER PRESSURE OR INTIMIDATION ARE ONLY AN AFTERTHOUGHT , TO NEGATE THE OFFER OF AMOUNT OF INCOME. IN SUPPORT OF THE CONTENTION THAT RETRACTION AFTER A SUBSTANTIAL PERIOD FROM MAKING A STATEMENT CANNOT BE ACCEPTED, THE LEARNED DR RELIED ON THE DECISION IN THE CASE OF AVINASH KUMAR SETIA REPORT ED IN 395 ITR 325. 12 ITA NO.1777/DEL/2016 11. HE FURTHER SUBMITTED THAT IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE FIRM, NO ENTRY OF RECEIPT OF MACHINES AND RETURN OF THOSE MACHINES HAS BEEN RECORDED. HE ALSO SUBMITTED THAT THE SO - CALLED SUPPLIER OF MACHINES M/S AMAAN HYDRAULICS (INDIA) WAS NOT RECORDED AS CREDITOR IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. ACCORDING TO THE LD. DR THE ENTIRE STORY OF RECE IPT OF MACHINES FROM M/S AMAAN H YDRAULICS (INDIA) AND RETURN THEREOF IS AN AFTERTHOUGHT ONLY AS DURING THE COURSE OF SURVEY PROCE EDING THE ASSESSEE DID NOT PROVIDE NAME OF ANY SUPPLIER OR COPY OF THE BILLS RECEIVED THERE FROM . HE SUBMITTED THAT MO U LDING MACHINES ARE PRODUCT SUBJECT TO EXCISE DUTY AND NO MANUFACTURER WOULD SUPPLY THOSE MACHINES WITHOUT RECEIVING ANY PAYMENTS. ACCORDING TO HIM, THE PAYMENT FOR MACHINERY MUST HAVE BEEN PAID OUT OF UNDISCLOSED SOURCES AND THE STORY OF RECEIPT OF MACHINES FRO M M/S AMAAN HYDRAULICS (INDIA) HAS BEEN PRESENTED TO TAKE BACK THE AMOUNT OF TAX PAID ON SAID UNDISCLOSED INCOME DURING THE COURSE OF SURVEY PROCEEDINGS. HE ACCORDINGLY SUBMITTED THAT ADDITION IN DISPUTE SHOULD BE SUSTAINED. 12. IN THE REJOINDER, THE LEAR NED COUNSEL SUBMITTED THAT THE RATIO IN THE CASE OF AVINASH MISHRA (SUPRA) IS NOT APPLICABLE OVER THE FACTS OF THE INSTANT CASE. HE FURTHER SUBMITT ED THAT MACHINERY WAS RECEIVED O N APPROVAL AND THEREFORE SAME WAS NOT ENTERED IN THE BOOKS OF ACCOUNTS. HE SU BMITTED THE CORRESPONDENCE BETWEEN THE ASSESSEE AND M/S. AMAAN HYDROLICS (INDIA) HAS NOT BEEN DISCARDED BY THE REVENUE AUTHORITIES. ACCORDING TO HIM THE ALLEGATION THAT PAYMENT WAS MADE FROM UNACCOUNTED SOURCES WAS A MERE GUESSWORK AND NO EVIDENCE IN THIS REGARD HAVE BEEN FOUND DURING THE COURSE OF SURVEY . HE SUBMITTED THAT IN RESPECT OF THE MOULDS PAYMENT HAS ALREADY BEEN MADE BY THE ASSESSEE AND THIS 13 ITA NO.1777/DEL/2016 FACT HAS NOT BEEN DENIED BY THE ASSESSING OFFICER. IN VIEW OF THE ABOVE SUBMISSIONS, THE LEARNED COUNSEL S UBMITTED THAT AMOUNT OF ADDITION IN DISPUTE DESERVE TO BE DELETED. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD INCLUDING THE PAPER - BOOK SUBMITTED BY THE ASSESSEE AND THE ORDERS OF THE LOWER AUTHORITIES. IN VIEW OF THE FINDIN G OF THE LOWER AUTHORITIES AND THE ARGUMENTS OF THE LD. COUNSEL OF THE ASSESSEE AND LD. DR, THE MAIN ISSUE IN DISPUTE IS WHETHER THE ASSESSEE MADE ANY PAYMENT OUT OF UNDISCLOSED SOURCES FOR ACQUIRING THE 6 MOULDING MACHINES WHICH WERE FOUND AT THE FACTORY PREMISE OF THE ASSESSEE DURING THE CO URSE OF SURVEY PROCEEDING. THE R EVENUE IS RELYING ON THE STATEMENT OF THE PARTNER OF THE FIRM SH RI ASHWANI SACHDEVA, WHEREIN HE SURRENDERED THE AMOUNT OF UNEXPLAINED INVESTMENT IN THOSE MACHINES AND OTHER EVIDENCE GATH ERED. THE CONTENTION OF THE ASSESSEE IS THAT SURRENDER WAS OBTAINED IN PRESSURE & INTIMIDATION AND ACTUALLY THE MACHINES WERE BROUGHT ON APPROVAL AND SUBSEQUENT TO THE SURVEY OPERATION SAME HAVE BEEN RETURNED BACK TO THE SUPPLIER AND THUS THERE IS NO QUES TION OF UNEXPLAINED INVESTMENT IN THOSE MACHINERIES. 14. IN VIEW OF THE ARGUMENTS OF THE PARTIES ON THE STATEMENT OF SH . SACHDEVA, FEW ISSUES ARISE BEFORE US. THE FIRST ISSUE IS WHETHER THE STATEMENT OF SH . SACHDEVA WAS RECORDED UNDER PRESSURE OR INTIMID ATION. THE ASSESSEE IS CONTENDING THAT THE STATEMENT WAS RECORDED AT MIDNIGHT WHEREIN HE WAS PRESSURIZED AND INTIMATED TO SURRENDER THE AMOUNT AGA INST MACHINERY AND MOULDS. THE R EVENUE ON THE OTHER HAND IS CONTRADICTING THE ARGUMENT OF THE LEARNED COUNSEL OF THE ASSESSEE. IN THE CASE OF KAILASH BEN MANHARLAL CHOKSHI (SUPRA) CITED BY THE LD. 14 ITA NO.1777/DEL/2016 COUNSEL, A STATEME NT UNDER SECTION 132(4) OF THE A CT WAS RECORDED AT MIDNIGHT ON THE DATE OF SEARCH, WHICH WAS RETRACTED BY THE ASSESSEE AFTER 2 MONTHS ON THE G ROUND THAT IT WAS RECORDED UNDER COERCION AND DURESS AND IN SUPPORT THEREOF AN AFFIDAVIT WAS ALSO FILED. THE ASSESSING OFFICER DID NOT CONSIDER THE EXPLANATION ON THE GROUND THAT RETRACTION WAS MADE AFTER DELAY OF 2 MONTHS. THE HON BLE HIGH COURT IN THE CI RCUMSTANCES HELD THAT NO CREDIT CAN BE GIVEN TO A STATEMENT RECORDED AT MIDNIGHT WHEN A PERSON MAY NOT BE IN A POSITION TO MAKE ANY CORRECT OR CONSCIOUS DISCLOSURE . FURTHER, IN SAID CASE THE R EVENUE COULD NOT BROUGHT ANY EVIDENCE ON RECORD IN SUPPORT OF SA ID DISCLOSURE AND THUS ADDITION WAS DELETED. 15. WE FIND THAT ON ISSUE OF RECORDING STATEMENT AT MIDNIGHT THOUGH THE ASSESSEE HAS ALLEGED THAT THE STATEMENT WAS RECORDED UNDER PRESSURE AND INTIMIDATION, BUT ACCORDING TO US, THE ABOVE ALLEGATION IS NOT SUBSTANTIATED BY ANY OF THE EVIDENCES. THE RELEVANT Q UESTION AND ANSWER OF THE STATEMENT OF S H . SACHDEVA ARE REPRODUCED AS UNDER: Q 17. AS PER PHYSICAL STOCK INVENTORY OF GOODS, DOCUMENTS/RECORDS CASH, FOLLOWING DISCREPANCIES HAVE BEEN NOTICES, WHICH YOU ARE REQUIRED TO EXPLAIN. (I) AS PER BOOKS OF ACCOUNTS, THE CASH IN HAND IS SHOWN AT RS.96,431/ - . HOWEVER, AS PHYSICAL VERIFICATION CASH HAS BEEN FOUND AT RS.10,21,449/ - , EXCESS CASH RS.9,25,018/ - (II) AS PER BOOKS OF ACCOUNTS, YOU HAVE SHOWN CREDITORS AT RS. 2,85,33,061/ - WHICH INCLUDES THE FOLLOWIN G : (A) M/S AGGARWAL TRADING CO., MUNDKA , NEW DELHI. RS.2,80,800/ - (B) M/S B K PLAST, TIMAR PUR, DELHI. RS.4,55,270/ - (C) M/S CRYSTAL PLYMER IMPEX, NERELA, DELHI. RS. 2,32,336/ - (D) M/S DAYA FOOTWEAR PVT. LTD. . RS. 2,21,934/ - (E) M/S LAXMI POLYCHEM, LAXMI NAGAR, DELHI. R S.1,53,660/ - 15 ITA NO.1777/DEL/2016 (F) M/S KANDLA POLYPLAST PVT. LTD. RS.4,66,454/ - (G) M/S KNEADER HOUSE, MUNDKA, DELHI. R S.4,94,000/ - (H) M/S KUTCH PLYMERS, BAWANA INDUSTRIAL AREA, DELHI. RS.2,32,330/ - (I) M/S MARVEL VINYLS LTD, NEHRU PLACE, DELHI. RS.4,20,160/ - RS.29,56,944/ - AS PER CORRESPONDENCE MADE BY YOU WITH THE ABOVE PARTIES (COPIES OF LETTERS) YOU HAVE BEEN DISPUTING THE ABOVE PAYMENTS, PLEASE EXPLAIN WHY IT SHALL NOT BE HELD THAT THIS LIABILITY TO THE EXTENT OF RS. 29,56,944/ - DOES NOT EXIST. (III) SIX NEW MACHINES I.E. (INJECTION MOLDING MACHINE) AND 2 MOULDS HAVE BEEN FOUND IN YOUR PREMISES FOR WHICH NO DOCUMENTS HAVE BEEN FURNISHED. PLEASE EXPLAIN. (IV) AS PER BOOKS OF ACCOUNTS STOCK OF GOODS HAVE BEEN SHOWN AT RS. 1,12,60,354/ - (RS. 1,17,39,106/ - - GROSS PROFIT OF RS. 4,78,752/ - HOWEVER PHYSICAL INVENTORY OF STOCK COST OF GOODS IS VALUED AT RS. 1,12,14,576/ - I.E. SHORT BY RS. 45,776/ - PLEASE EXPLAIN. ANS. FOR EXCESS CASH IN HAND OF RS.9,25,018/ - , 9 SUNDRY CREDITORS OF RS.29,56,944/ - TOTALING TO RS.38,81,962/ - , I HAVE NO EXPLANATIONS TO OFFER. FURTHER 6 NEW INJECTION MOLDING MACHINES AND 20 MOULDS HAVE BEEN PURCHASED BY US FOR RS.91,37,456/ - (6 X RS. 14,00,000/ - = RS. 84,00,000/ - + 20 X RS. 35,000/ - = RS. 7,00,000/ - + CARTAGE , LOADING, UNLOADING ETC. @ 37,456/ - ). HOWEVER, WE HAVE NOT GOT THE BILLS AND HAVE ALSO NOT MADE PAYMENT FOR THESE MACHINES AND MOULDS ETC. FURTHER, REGARD ING THE SHORTAGE OF STOCK VALUATION BY RS.45,776/ - , IT IS STATED THAT THE DIFFERENCE OF 45,776/ - IS QUIET INSIGNIFICANT KEEPING IN VIEW THE TOTAL STOCK OF RS. 1,12,60,354/ - AND IT IS FURTHER SUBMITTED THAT ALL THE STOCK HAS BEEN PROPERLY ACCOUNT FOR IN THE EXCISE RECORD ALSO. HOWEVER, TO BUY PIECE OF MIND, I SURRENDER RS. 38,81,962/ - (SUNDRY CREDITORS OF RS.29,56,944 AND EXCESS CASH IN HAND OF RS.9,25,018/ - ) AS ADDITIONAL INCOME OF THE FIRM M/S ALERT INDIA IN THE CURRENT F.Y. 2010 - 11 RELEVANT TO A.Y. 2011 - 1 2 IN ADDITION TO BE NORMAL INCOME SUBJECT TO THE CONDITION THAT NO PENALTY OR PROSECUTION PROCEEDINGS WILL BE INITIATED AGAINST M/S ALERT INDIA OR ITS PARTNERS. Q18. REGARDING 6 NEW MACHINES (INJECTION MOULDING MACHINES) AND 20 MOULDS, YOUR EXPLANATION ME NTIONING THAT ABOVE MACHINES AND MOULDS HAVE BEEN PURCHASED BY YOU WHICH ARE LYING IN YOUR PROMISES TO WHICH NO BILLS HAVE BEEN PRODUCED NOR ANY PAYMENT IS STATED TO HAVE BEEN MADE IS NOT ACCEPTABLE. PLEASE EXPLAIN. ANS. TO BUY PIECE OF MIND, I SURRENDER FURTHER RS.91,37,456/ - BEING THE VALUE OF 6 INJECTION MOULDING MACHING AND 20 MOULDS AND CARTAGE ETC. AS ADDITIONAL INCOME OF THE FIRM M/S ALERT INDIA IN ADDITION TO THE NORMAL INCOME SUBJECT TO THE CONDITION THAT NO 16 ITA NO.1777/DEL/2016 PENALTY OR PROSECUTION PROCEEDINGS WILL BE INITIATED AGAINST THE FIRM M/S ALERT INDIA OR ITS PARTNERS. ACCORDINGLY, I SURRENDER A TOTAL OF RS. 1,30,19,418/ - (SUNDRY CREDITORS OF RS.29,56,944/ - + EXCESS CASH IN HAND OF RS. 9,25,018/ - + MACHINERY AND MOULDS AS STATED ABOVE OF RS.91,37,456/ - ) AS AD DITIONAL INCOME OF THE FIRM M/S ALERT INDIA FOR THE CURRENT FINANCIAL YEAR 2010 - 11 RELEVANT TO A.Y. 2011 - 12 IN ADDITION TO BE NORMAL INCOME. 16. ON PERUSAL OF THE STATEMENT , WE FIND THAT THERE IS NO EVIDENCE THAT THE STATEMENT OF SH . SACHDEVA , PARTICULARLY, THE SURRENDER WAS RECORDED AT MIDNIGHT. AT THE BEGINNING OF THE STATEMENT , THE DATE IS RECORDED AS 01/10/2010, WHEREAS AT END OF THE STATEMENT THE DATE RECORDED IS 02/10/2010 . T HUS , POSSIBILITY OF RECORDING THE STATEMENT IN DAYLIGHT OF 02/10/ 2010 COULD NOT BE REJECTED. MERELY MENTIONING THE DATE AT THE EN D OF THE STATEMENT AS 2/10/2010 , IT CANNOT BE PRESUMED THAT IT WAS RECORDED AT MIDNIGHT OF 01/10/2010. NO SUCH FACT HAS BEEN ASSERTED BY SH. SACHDEVA BEFORE THE LOWER AUTHORITIES. T H E ASSESSEE FIRM , IS IN TERPRETING THE STATEMENTS OF SH. SACHDEVA ACCORDING TO ITS CHOICES. THUS, THE RATIO IN THE CASE OF KAILASH BEN MANHARLAL CHOKSHI (SUPRA) CANNOT BE IMPORTED TO THE FACTS OF THE INSTANT CASE. 17. FURTHER , DURING THE COURSE OF SURVEY THE ASSESSEE SURRENDERED INCOME OF RS. 1, 30,19,418/ - WHICH INCLUDED SURRENDER ON ACCOUNT OF UNEXPLAINED CASH OF RS. 9, 25,018/ - UNEXPLAINED CREDITORS OF RS.29, 56, 944 / - AND UNEXPLAINED INVESTMEN T IN MACHINES AND MOULDS OF RS.91,37, 456/ - . THE ASSESSEE HAS DULY HONOURED THE SURRENDER OF UNEXPLAINED CASH AND UNEXPLAINED CREDITORS. IN SUCH CIRCUMSTANCES, IT CANNOT BE UNDERSTOOD AS HOW, THERE IS NO ALLEGATION OF PRESSURE OR INTIMIDATION IN RESPECT OF SURRENDER OF UNEXPLAINED CASH AND 17 ITA NO.1777/DEL/2016 UNEXPLAINED CREDITORS AND THERE IS ONLY PRESS URE OR INTIMIDATION IN RESPECT OF UNEXPLAINED INVESTMENT IN MACHINES AND MOULDS. 18. FURTHER, WE FIND THAT DURING THE COURSE OF SURVEY PROCEE DING, THE ASSESSEE TENDERED CHEQUES AMOUNTING TO RS. 40,23,000/ - CORRESPONDING TO THE TAX LIABILIT Y ON THE INCOME SURRENDERED RS. 1,30,19,418/ - . THE CHEQUES WERE DEPOSITED IN BANK BY THE TAX AUTHORITIES SUBSEQUENT TO THE SURVEY PROCEEDINGS. IF THE STATEMENT WAS RECORDED UNDER PRESSURE OR INTIMIDATION, THE ASSESSEE SHOULD HAVE OBJECTED IMMEDIATELY AND REQUESTED THE BANK TO DISHONOUR THOSE CHE QUES. AS FAR AS RECORDS OF THE CASE BEFORE US, NO SUCH REQUEST WAS MADE BY THE ASSESSEE EITHER TO THE INCOME - TAX A UTHORITIES FOR NOT TO DEPOSIT THE SAID CHE QUES OR TO THE BANK AUTHORITIES TO STOP THE PAYMENT OF THOSE CHEQUES. FURTHER , WE ALSO FIND THAT SH . SACHDEVA DID NOT FILE ANY LETTER MAKING ALLEGATION OF PRESSURE AND INTIMIDATION BEFORE THE ASSESSING OFFICER. SH. SACHDEVA ALSO DID NOT FILE ANY LETTER OR STATEMENT RETRACTING HIS STATEMENT MADE DURING THE COURSE OF SURVEY PROCEEDIN GS. IN THIS CASE, SINCE THE ASSESSEE DID NOT DECLAR E THE INCOME SURRENDERED OF RS. 91,37,456/ - IN THE RETURN OF INCOME, IT HAS BEEN DEEMED BY THE ASSESSEE AS RETRACTION OF THE STATEMENT OF SH. SACHDEVA. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE ALLEGATION OF PRESSURE AND INTIMIDATION ON SH. SACHDEVA BY THE SURVEY TEAM IS WITHOUT ANY BASIS OR SUPPORTING EVIDENCE AND ACCORDINGLY SAME ARE REJECTED. 19. THE SECOND ISSUE IS WHETHER THE STATEMENT RECORDED ON OATH UNDER SURVEY PROCEEDINGS COULD BE ACCEPTED AS A STATEMENT RECORDED AS PER LAW AND IT COULD BE M ADE BASIS FOR MAKING ADDITION. T HE LEARNED COUNSEL HAS SUBMITTED THAT DURING THE 18 ITA NO.1777/DEL/2016 COURSE OF SUR VEY PROCEEDING U/S 133A OF THE A CT, THE AUTHORISED OFFICER IS NOT AUTHORI SED TO RECORD STATEMENT ON OATH. ACCORDING TO HIM, IN THE INSTANT CASE STATEMENT OF SRI SACHDEVA HAS BEEN RECORDED ON OATH BY THE A UTHORISED O FFICER, WHICH BEING NOT IN ACCORDANCE WITH LAW, SHOULD BE IGNORED AND NOT RELIED UPON. IN THE CASE OF S . KHADAR KH AN SON (SUPRA) THE HON BLE SUPREME COURT GRANTING THE PETITION OF SPECIAL LEAVE UPHELD THE DECISION OF THE HON BLE MADRAS HIGH COURT WHEREIN IT IS HELD THAT SEC TION 133A DOES NOT EMPOWER ANY INCOME - T AX A UTHORITY TO EXAMINE ANY PERSON ON OATH, HENCE ANY SUCH STATEMENT HAS NO EVIDENTIARY VALUE AND ANY ADMISSION MADE DURING SUCH A STATEMENT CANNOT, BY ITSELF, BE MADE THE BASIS FOR ADDITION . SIMILARLY, HON BLE DELHI HIGH COURT IN THE CASE OF DHINGRA METAL WORKS (SUPRA) HELD THAT FOR A STATEMENT TO HAVE EVIDE NTIARY VALUE, THE SURVEY OFFICER SHOULD HAVE BEEN AUTHORISED TO ADMINISTER OATH AND RECORDS SWORN STATEMENT, BUT HE HAS NOT BEEN SO AUTHORISED UNDER SECTION 133 A OF THE A CT. THE HON BLE COURT FURTHER HELD THAT THE WORD MAY USED IN SECTION 133A(3)(III) OF THE ACT CLARIFIES BEYOND DOUBT THAT MATERIAL COLLECTED IN THE STATEMENT RECORDED DURING THE SURVEY IS NOT A CONCLUSIVE PIECE OF THE EVIDENCE BY ITSELF. IT IS SETTLED LAW THAT THE ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE, IT CANNOT BE SAID TO BE CONCLUSIVE AND IT IS OPEN TO THE PERSON WHO HAS MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT. IN THE CASE OF PCIT VS AVINASH KUMAR SETIA ( SUPRA) HON BLE DELHI HIGH COURT , THE ASSESSEE VOLUNTARILY MADE A DECLARATION 2 MONTHS AFTER THE DATE OF THE SURV EY BUT DID NOT INCLUD THE SAID DECLARATION IN THE RETURN OF INCOME FILED. THE ASSESSEE MADE RETRACTION IN WRITING AFTER TWO YEARS FROM THE DATE OF DECLARATION MADE. THE HON BLE HIGH COURT REJECTED THE SUBMISSION OF THE LEARNED 19 ITA NO.1777/DEL/2016 COUNSEL OF THE ASSESSEE THAT THE ASSESSEE HAD FILED A RETURN OF INCOME WITHOUT DISCLOSING THE SAID SUM DECLARED, SO IT SHOULD HAVE BEEN DEEMED THAT THE ASSESSEE RESILED FROM THE SAID DECLARATION. THE HON BLE HIGH COURT HELD THAT IT WAS TOO MUCH DELAYED TO BE TAKEN THE RETRACTION AS BO NAFIDE . THE COURT ALSO HELD THAT THE CIRCUMSTANCES UNDER WHICH RETRACTION WAS MADE ALSO HAD NOT BEEN EXPLAINED . IN SUCH CIRCUMSTANCES, THE HON BLE HIGH COURT SET ASIDE THE ORDER PASSED BY THE TRIBUNAL. IN THE ABOVE CASE , THE HON BLE HIGH COURT DISTINGUISHE D THE DECISION OF THE MADRAS HIGH COURT IN THE CASE OF CIT VS. KHADER KHAN SON REPORTED IN 300 ITR 157 , OBSERVING AS UNDER: 14. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISION OF THE MADRAS HIGH COURT IN CIT V. KHADER KHAN SON (2008) 300 ITR 157 (MAD.). IN THE SAID CASE, DURING THE SEARCH ACTION, ONE OF THE PARTNERS OF THE ASSESSEE MADE A STATEMENT UNDER SECTION 133A OF THE ACT OFFERING ADDITIONAL INCOME. LESS THAN 10 DAYS THEREAFTER, ON 3 RD AUGUST, 2001, THE STATEMENT WAS RESULED FROM IN WRITING. THIS AGAIN, THEREFORE, MAKES THE CASE DISTINGUISHABLE FROM THE CASE IN HAND WHERE THE ASSESSEE HAS WAITED FOR 2 YEARS TO RESILE FROM THE DECLARATION EARLIER MADE. 15. ON THE SIDE OF REVENUE, RELIANCE WAS PLACED ON THE DECISIO N IN RAJ HANS TOWERS PVT. LTD. VS. COMMISSIONER OF INCOME TAX - V (2015) 373 ITR 9 (DEL.) WHERE THE COURT EXPLAINED THE EVIDENTIARY VALUE OF A STATEMENT UNDER SECTION 133A OF THE ACT. 16. THE COURT FINDS THAT IN THE PRESENT CASE, THE ITAT ERRED IN RELYING U PON THE DECISION IN CIT V. KHADER KHAN SON (SUPRA), WHICH AS NOTED HEREINBEFORE, IS DISTINGUISHABLE ON FACTS. THE COURT IS NOT SATISFIED THAT THE RETRACTION MADE BY THE ASSESSEE TWO YEARS AFTER THE DECLARATION WAS BONAFIDE. THERE WAS NO SATISFACTORY EXPLAN ATION FOR NOT INCLUDING THE SAID AMOUNT IN THE RETURN OF INCOME FILED BY THE ASSESSEE ON 26 TH SEPTEMBER, 2009. 20 ITA NO.1777/DEL/2016 20. IN VIEW OF THE JUDICIAL PRONOUNCEMENTS DISCUSSED ABOVE, IT IS EVIDENT THAT NO ADDITION CAN BE MADE MERELY ON THE BASIS OF STATEMENT RECORDED DURING THE COURSE OF SURVEY PROCEEDING AND FOR MAKING THE ADDITION THE STATEMENT MUST BE CORROBORATED WITH OTHER EV IDENCES. 21 . WE FIND THAT I N THE INSTANT CASE, THE LD. CIT(A) HAS UPHELD THE ADDITION NOT MERELY IN VIEW OF THE STATEMENT OF SH . S ACHDEVA OR SURRENDER OF THE INCOME CORRESPONDING TO INVESTMENT IN MACHINERY, BUT THE LD. CIT(A) HAS EXAMINED THE ADDITION IN VIEW OF THE PR OVISIONS OF SECTION 69A OF THE A CT , WHERE IF THE ASSESSEE IS FOUND TO BE OWNER OF A VALUABLE ARTICLE AND SAME IS NOT FOUND TO BE RECORDED IN THE BOOKS OF ACCOUNTS, THE ASSESSEE IS REQUIRED TO EXPLAIN SATISFACTORILY THE SOURCE OF ACQUISITION OF SAID ARTICLE AND IN CASE OF FAILURE IT IS DEEMED TO BE THE INCOME OF THE ASSESSEE. THE RELEVANT PROVISION I.E. 69A O F THE A CT IS REPRODUCED AS UNDER: UNEXPLAINED MONEY, ETC. 69A. WHERE IN ANY FINANCIAL YEAR THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE AND SUCH MONEY, BULLION, JEWELLERY OR VALUABLE ARTICLE IS NOT RECORDED IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME36, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF ACQUISITION OF THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE, OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE 37[ASSESSING] OFFICER, SAT ISFACTORY, THE MONEY AND THE VALUE OF THE BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE MAY BE DEEMED TO BE THE INCOME36 OF THE ASSESSEE FOR SUCH FINANCIAL YEAR.] 22 . THUS , IN VIEW OF THE SECTION 69A OF THE A CT, THE ONUS WAS ON THE ASSESSEE TO EXPLAIN NATURE AND SOURCE OF ACQUISITION OF THE 6 INJECTING MOULDING MACHINES, IRRESPECTIVE OF THE FACT , WHETHER THE 21 ITA NO.1777/DEL/2016 AMOUNT WAS SURRENDERED DURING THE COURSE OF THE SURVEY OR NOT. THE ASSESSEE WAS REQUIRED TO DISCHARGE T HIS ONUS OF EXPLAINING NATURE AND SOURCE OF ACQUISITION OF THOSE MACHINES BY WAY OF ADDUCING EVIDENCES. DURING THE COURSE OF THE SURVEY PRECEDING THE PARTNER OF THE ASSESSEE FIRM FAILED TO EXPLAIN SOURCE OF INVESTMENT IN SAID MACHINES AND THUS HE SURRENDER ED. BUT IN THE ASSESSMENT PROCEEDING, THE ASSESSEE SUBMITTED EXPLANATION THAT THOSE MACHINERIES WERE PURCHASED FROM M/S AMAAN H YDRAULICS (I NDIA) AND WERE DELIVERED ON 01/10/2010 I.E. ON THE DATE OF SURVEY AND THUS COULD NOT BE INSTALLED. THE ASSESSEE SUBMI TTED THAT INVOICE/BILL OF THOSE MACHINES WERE NOT RECEIVED ON THE DATE OF THE SURVEY AND THEREFORE COULD NOT BE ENTERED IN THE BOOKS OF ACCOUNT. BEFORE US, THE LEARNED COUNSEL HAS SUBMITTED THAT PURCHASE OF THE MACHINERY WAS NOT RECORDED AND BOOKS OF ACCOU NT A S SAME WAS RECEIVED ON APPROVAL. REGARDING SOURCE OF INVESTMENT, THE ASSESSEE HAS SUBMITTED THAT NO PAYMENT WAS MADE TO THE PARTY AND THOSE MACHINES HAVE BEEN RETURNED BACK IN VIEW OF THE DEFECTS IN THOSE MACHINES. THUS ACCORDING TO THE ASSESSEE, NO PA YMENT WAS MADE TO THE SUPPLIER FOR ACQUIRING THE MACHINES AND THEREFORE THERE IS NO REQUIREMENT TO DISCHARGE THE ONUS OF SOURCE OF ACQUISITION BY THE ASSESSEE. 23 . THE LD. CIT(A) HAS FOUND VARIOUS FAULTS IN THE ABOVE EXPLANATION OF THE ASSESSEE TO JUSTIF Y THE SOURCE OF ACQUISITION OF THE MACHINERIES, WHICH WE HAVE ALREADY REPRODUCED IN EARLIER PARAS. 2 4 . WE FIND THAT IN THE INSTANT CASE , FIRSTLY, THE LD. CIT(A) ON PAGE 10 OF THE IMPUGNED ORDER BASED ON THE DOCUMENTS OF THE ASSESSEE, HAS OBSERVED THAT MACHINES WERE RECEIVED AND BILLS WERE PASSED IMPLYING THAT PAYMENTS WERE DONE. THE RELEVANT 22 ITA NO.1777/DEL/2016 FINDING OF THE LD. CIT(A) THO UGH REPRODUCED IN EARLIER PARAS , IT IS AGAIN REPRODUCED AS UNDER : THIRDLY THE ASSESSEE HAS FILED COPY OF ITS INTERNAL DOCUMENT SCANNED HEREUNDER. ON THIS DOCUMENT IT HAS BEEN MENTIONED PARTY BILL PASSED AGAINST BILL NO. 87 OF 1/X/X . THI S CLEARLY SHOWS THAT THE MACHINES WERE RECEIVED AND BILLS WERE PASSED IMPLYING THEREBY PAYMENTS WERE DONE. 2 5 . THE LEARNED COUNSEL OF THE ASSESSEE HAS NOT CONTROVERTED THIS FINDING OF THE LD. CIT( A). IN NORMAL TERMINOLOGY OF ACCOUNTING, BILL PASSED MEANS PAYMENT HAS BEEN MADE BY THE ASSESSEE. IN OUR OPINION, WHEN THE DOCUMENTS OF THE ASSESSEE ITSELF SHOWS THAT BILLS FOR THE MACHINES WERE PASSED, WHICH MEANS PAYMENT WAS MADE BY THE ASSESSEE. 26 . S ECONDLY, THE ASSESSEE HAS FAILED TO FURNISH PRODUCTION REPORT THAT THE MACHINES IN QUESTIONS WERE HAVING LOW YIELD. ACCORDING TO THE ASSESSEE, THIS WAS THE MAIN REASON FOR RETURN OF THOSE MACHINES TO THE SUPPLIER, BUT THIS REASON HAS NOT BEEN SUBSTANTIATED BY THE ASSESSEE WITH EVIDENCES. THIRDLY, THE P ROBABILITY THAT MACHINES WORTH R S.82 LAKHS WOULD BE SUPPLIED TO THE ASSESSEE WITHOUT ANY PAYMENT TO THE SUPPLIER IS ALSO REMOTE. FOURTHLY, THE RECEIPT OF THE MACHINES AND RETURN THEREOF HAS NOT FOUND PLACE IN FORM NO.3 CD OF THE T AX AUDIT R EPORT. 2 7 . WE HAVE ALSO NOTICED CERTAIN OTHER DISCREPANCIES IN THE DOCUMENTS SUBMITTED BY THE ASSESSEE IN THE PAPER BOOK FILED BEFORE US . THE ASSESSEE HAS PRODUCED COPY OF SO CALLED BILLS NO. 84 AND 87 DATED 0 1/10/2000 ISSUE D BY M/S AMAAN HYDRAULICS (INDIA) , WHICH ARE AVAILABLE ON PA GE 122 AND 123 OF THE PAPER - BOOK . THE ASSESSEE ALSO CLAIMED THAT THE MACHINERY WAS 23 ITA NO.1777/DEL/2016 TRANSPORTED TO THE PREMISE OF THE ASSESSEE AND HAS SUBMIT TED A RECEIPT ISSUED BY MALLIK T RANSPORT C OMPANY, HARYA NA, WHICH IS AVAILABLE ON PAGE 125 OF THE PAPER BOOK. BUT IN THE SO CA LLED BILLS ISSUED BY M/S AMAAN H YDRAULICS ( INDIA ) , THE SPACE FOR VEHICLE NUMBER IS LEFT BLANK AND THERE IS NO MENTION AS THROUGH WHICH MODE OF TRANSPORT, THOSE MACHINES WERE TRANSPORTED AT THE PREMISE OF THE ASSESSEE. THE INJECTING MOULDING MACHINES ARE QUITE BULKY AND NOT SMALL MACHINES , WHICH COULD BE TRANSPORTED PERSONALLY BY HAND. THE PHOTOCOPY O F THE RECEIPT ISSUED BY MALLIK T RANSPORT C OMPANY IS NOT BEARING SIGNATURE OF THE PERSON , WHO ISSUED THE RECEIPT AND ALSO NOT CARRYING ANY SERVICE TAX REGISTRATION NUMBER OF THE TRANSPORTER. THE ASSESSEE HAS ALSO SUBMITTED COPY OF THE SO - CALLED LETTE RS EXCHANGED BETWEEN M/S AMAAN H YDRAULICS (INDIA) AND THE ASSESSEE, WHICH ARE AVAILA BLE ON PAGE 127 TO 137 OF THE PAPER BOOK. THERE ARE NO SUPPORTING EVIDENCE AS HOW THOSE LETTERS WERE DELIVERED, WHETHER BY POST OR BY COURIER OR BY ANY OTHER MEANS OF DELIVERY. 28 . IN VIEW OF THE ABOVE OBSERVATIONS, PRIMA FACIE THE PREPONDERANCE OF PROBA BILITY GOES AGAINST THE ASSESSEE. 2 9 . NOTWITHSTANDING OUR ABOVE OBSERVATIONS, ONE IMPORTANT LINK WHICH IS MISSING IN THE ENTIRE ANALYSIS OF EVIDENCES, IS THAT NO INQUIRY HAS BEEN MADE BY THE LOWER AUTHORITIES IN THIS RESPECT FROM M/S AMAAN H YDRAULICS (I NDIA). THE ASSESSEE HAS CLAIMED BEFORE US THAT ALL THOSE DOCUMENTS WERE FIL ED BEFORE THE LOWER AUTHORITIES . WE FIND THAT THE AUTHORITIES HAVE NOT EXAMINED WHETHER SAID PARTY WAS ENGAGED IN MANUFACTURING OF THOSE MACHINES OR WAS ONLY ENGAGED IN SUPPLYING TO OLS AND SPARE PARTS. THE AUTHORITIES HAVE ALSO NOT EXAMINED WHETHER THOSE BILLS PRODUCED BY THE ASSESSEE, HAVE ACTUALLY BEEN ISSUED BY THAT 24 ITA NO.1777/DEL/2016 PARTY. THE AUTHORITIES HAVE ALSO NOT EXAM INED THE RECORDS OF THE MALLIK T RANSPORT C OMPANY, WHICH THE ASSESSEE HAS CL AIMED TO BE THE TRANSPORTER OF THE MACHINES. THE AUTHORITIES HAVE ALSO NOT EXAMINED GENUINENESS OR AUTHENTICITY OF THE LETTER OF CORRESPONDENCE EXCHANGED BETWEE N THE ASSESSEE AND THE SUPPLIER , PRODUCED BY THE ASSESSEE. THE LOWER AUTHORITIES HAVE ALSO NOT E XAMINED, THE SALES TAX RECORD OR CENTRAL EXCISE RECORDS OF M/S AMAAN HY D R O L I CS (INDIA) . ALL THOSE ENQUIRIES COULD HAVE ESTABLISH ED WITH SOME CERTAINTY, WHETHER THE EXPLANATION OF THE ASSESSEE IS HAVING ANY SUBSTANCE. 30 . IN OUR OPINION, IT IS EXTREMELY NECESSARY TO EXAMINE GENUINENESS OF THE CORRESPONDENCE BETWEEN THE ASSESSEE AND M/S AMMAN H YDRAULICS (INDIA) AND OTHER RECORDS OF THE ASSESSEE A S WELL AS RECORDS OF M/S AMAAN H YDRAULICS (INDIA). WITHOUT EXAMINING AND VERIFYI NG THE RECORDS IN THIS RESPECT, REJECTING THE CONTENTION OF THE ASSESSEE IN HOLDING THAT INVESTMENT IN MACHINES WAS MADE OUT OF UNDISCLOSED SOURCES WOULD NOT BE JUSTIFIED AND AGAINST THE CONSCIENCE OF JUSTICE. 3 1 . IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES, WE FEEL IT APPROPRIATE TO RESTORE THIS ISSUE IN DISPUTE TO THE FILE OF THE LD. CIT(A) FOR CARRYING O UT ENQUIRIES AS MENTIONED ABOVE . HE MAY REMAND THE MATTER TO THE AO, IF CIRCUMSTANCES SO REQUIRES. THE ASSESSEE IS DIRECTED TO PRODUCE PROPRIETOR OF M/S AM AAN HYDROLIC (INDIA) BEFORE THE AUTHORITIES ALONGWITH ALL NECESSAR Y DOCUMENTARY EVIDENCES FOR CRO SS - EXAMINATION BY HIM. THE ASSESSEE MAY BE PROVIDED RESULTS OF THE ENQUIRIES AND CROSS - EXAMINATION BY THE INCOME - TAX AUTHORITIES AND ALSO AFFORDED ADEQUATE OPPORTUNITY OF BEING HEARD. THE LD. CIT(A) IS THEN DIRECTED TO DECIDE THE ISSUE IN DISPUTE IN ACCORDANCE WITH LAW WITHOUT PREJUDICE BY OUR 25 ITA NO.1777/DEL/2016 OBSERVATIONS ABOVE. THE GROUNDS OF THE APPEAL ARE ACCORDINGLY ALLOWED FOR STATISTICAL PU RPOSES. 32 . IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUN CED IN THE OPEN COURT ON 1 2 T H OCTOBER , 201 8 . S D / - S D / - DIVA SINGH O.P. KANT JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 2 T H OCTOBER , 201 8 . RK / - (D.T.D . ) COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI