The ITO, Ward-4(1), Ahmedabad V. Gopal Glass Works Ltd., Ahmedabad

ITA 2143/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1584 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-04-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 30-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources
• Section: 133A; 115JB; 68; 132

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ ITA.NO.2143/AHD/2011 [ASSTT.YEAR 2007-08] THE ITO, WARD - 4(1) AHMEDABAD. VS GOPAL GLASS WORKS LTD. 26, GOVT.SERVANTS SOCIETY B/H. MUNICIPAL MARKET NAVRANGPURA AHMEDABAD 380 009. PAN : AABCG 5599 H )* / (APPELLANT) +, )* / (RESPONDENT) REVENUE BY : SHRI R.I. PATEL, CIT - DR WITH SHRI A.K. REWER, SR.DR ASSESSEE BY : SHRI TUSHAR HEMANI, AR / DATE OF HEARING : 27/04/2016 / DATE OF PRONOUNCEMENT: 04/05/2016 -./ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF THE LD.CIT(A)-VIII, AHMEDABAD DATED 14.6.2011 PASSED FO R THE ASST.YEAR 2007-08. 2. THE REVENUE HAS TAKEN FOUR GROUNDS OF APPEAL, BU T ITS GRIEVANCES REVOLVE AROUND TWO ISSUES VIZ. THAT THE LD.CIT(A) H AS ERRED IN DELETING THE ADDITION OF RS.2.00 CRORES MADE BY THE AO ON AC COUNT OF ITA NO.2143/AHD/2011 2 UNDISCLOSED INCOME, AND (B) THE LD.CIT(A) HAS ERRED IN EXCLUDING RS.2.00 CRORES FROM THE BOOK PROFIT COMPUTED UNDER SECTION 115JB OF THE INCOME TAX ACT. RESTS OF THE GROUNDS ARE GENER AL IN NATURE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-CO MPANY HAS FILED ITS RETURN OF INCOME ELECTRONICALLY ON 31.10.2007 DECLA RING NIL INCOME AFTER CLAIMING SET OFF OF THE CARRY FORWARD LOSS OF RS.73,90,737/-. THIS RETURN WAS REVISED ON 28.09.2008 AND THE ASSESSEE H AS REDUCED THE CLAIM OF BROUGHT FORWARD LOSS TO THE TUNE OF RS.62,9,472/ -. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND N OTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED AND SERVED UPON THE AS SESSEE. ON SCRUTINY OF THE ACCOUNTS IT REVEALED TO THE AO THAT A SURVEY UNDER SECTION 133A OF THE INCOME TAX ACT, 1961 WAS CARRIED OUT AT THE BUS INESS PREMISES OF THE ASSESSEE ON 18.12.2006. DURING THE COURSE OF SURVE Y PROCEEDINGS, STATEMENT OF SHRI MAYURBHAI J. SHAH, MANAGING DIREC TOR OF THE ASSESSEE- COMPANY WAS RECORDED. SHRI MAYURBHAI J. SHAH IN R EPLY TO QUESTION NO.20 CLEARLY DISCLOSED A SUM OF RS.2.00 CRORES TO BE OFFERED TO TAX. HOWEVER, WHILE FILING THE RETURN OF INCOME, THE ASS ESSEE DID NOT OFFER THIS AMOUNT OF RS.2.00 CRORES FOR TAXATION. THE LD .AO HAS CONFRONTED THE ASSESSEE AS TO WHY IT FAILED TO DISCLOSE RS.2.0 0 CRORES OFFERED DURING THE COURSE OF SURVEY PROCEEDING. IN RESPONSE TO TH E QUERY OF THE AO, IT WAS SUBMITTED BY THE ASSESSEE THAT THE MD HAS RETRA CTED HIS STATEMENT VIDE LETTER DATED 3.1.2007. NO INCRIMINATING MATE RIAL WAS FOUND DURING THE COURSE OF SURVEY WHICH CAN SUGGEST CORRESPONDIN G UNACCOUNTED INCOME AT RS.2.00 CRORES. ACCORDING TO THE MD, THE STATEMENT WAS TAKEN UNDER GREAT PRESSURE AND COERCION BY THE DEPARTMENT . THE REPLY OF THE ASSESSEE HAS BEEN REPRODUCED IN PARA-3 AND 4 OF THE ASSESSMENT ORDER. ITA NO.2143/AHD/2011 3 ON AN ANALYSIS OF THE STAND OF THE ASSESSEE, THE LD .AO HAS MADE AN ADDITION OF RS.2.00 CROES. THE CONCLUSIONS OF THE AO ARE THAT WHEN THE MD ADMITTED UNDISCLOSED INCOME AT RS.2.00 CRORES, O THER TWO IMPORTANT PERSONS WERE SITTING WITH HIM, ONE WAS JOINT-DIRECT OR AND THE OTHER WAS PRESIDENT (FINANCE), THEREFORE, THERE CANNOT BE ANY QUESTION OF PRESSURE OR COERCION. THE DISCLOSURES WERE MADE WITH RESPEC T TO INVESTMENT IN RESIDENTIAL HOUSE, PLANT & AND MACHINERY AND CASH-L OAN. BUT UNFORTUNATELY, THE ASSESSEE COMPANY DID NOT COME WI TH CORRECT VALUATION OF RESIDENTIAL PROPERTY ETC. 4. DISSATISFIED WITH THE ADDITION, THE ASSESSEE CAR RIED THE MATTER IN APPEAL. THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS , WHICH HAVE BEEN EXTENSIVELY REPRODUCED BY THE CIT(A) FROM PARA NO.5 .3 (PAGE NOS.11 TO 40) OF THE IMPUGNED ORDER. THE LD.CIT(A) HAS RECOR DED A FINDING THAT NO INCRIMINATING MATERIAL WAS FOUND BY THE SURVEY TEAM DURING THE COURSE OF SURVEY. ACCORDINGLY, THE LD.CIT(A) HAS DELETED THE ADDITION BY OBSERVING AS UNDER: 5.7. FROM THE FINDINGS IN THE ASSESSMENT ORDER, IT IS OBSERVED THAT THERE IS NO COGENT MATERIAL AVAILABLE ON RECORD TO SUSTAIN THE ADDITION MADE BY A.O. THE A.O HAS RELIED UPON SOLE LY ON THE STATEMENT RECORDED, DURING SURVEY, AND THAT STATEM ENT WAS ALSO RETRACTED BY THE APPELLANT LATER ON. AS DISCUSSED E LABORATELY IN PRECEDING PARAS, SOLELY ON THE BASIS OF STATEMENTS RECORDED DURING SURVEY OPERATIONS, THE ADDITION CANNOT SURVIVE. T HE RELIANCE PLACED BY THE LD. A.R ON VARIOUS JUDIC IAL PRONOUNCEMENTS ALSO SUPPORTS THE CONTENTION OF THE APPELLANT. IN PARA 6 AND 7 OF THE ASSESSMENT ORDER, THE A.O DI SCUSSED REGARDING DEPOSITS RECEIVED THROUGH BANKING CHANNEL AND TRIED TO LINK' THOSE WITH DISCLOSURE MADE DURING SURVEY OPER ATION. THE A.O FAILED IN THAT ATTEMPT. THE A.O HAD THE AUTHORITY T O INVESTIGATE ITA NO.2143/AHD/2011 4 THOSE DEPOSITS AND IF NOT FOUND GENUINE HE COULD HA VE INVOKED THE PROVISIONS OF SEC. 68 OF THE I.T ACT 1961. THE A.O COULD NOT ESTABLISH ANY NEXUS BETWEEN DEPOSITS RECEIVED THROU GH BANKING CHANNEL AND THE STATEMENTS RECORDED DURING SURVEY O PERATIONS. 5.8 IN VIEW OF THE DETAIL DISCUSSIONS HELD ABOVE, I AM OF THE CONSIDERED OPINION THAT THE ADDITION MADE BY THE AO IS NOT SUPPORTED BY ANY COGENT EVIDENCE AND THEREFORE IT I S DELETED. 5. BEFORE US, THE LD.DR RELIED UPON THE ORDER OF TH E AO. HE CONTENDED THAT AN AMOUNT OF RS.2.00 CRORES WAS ADMI TTED BY THE MANAGING DIRECTOR, AS INCOME TO BE OFFERED TO TAX. THE ASSESSEE FAILED TO SHOW THIS AMOUNT IN ITS TOTAL TAXABLE INCOME. T HEREFORE, THE LD.AO HAS RIGHTLY MADE ADDITION. 6. ON THE OTHER HAND, THE LD.COUNSEL FOR THE ASSESS EE CONTENDED THAT AS FAR AS THE STATEMENT GIVEN UNDER SECTION 133A(3) (III) DURING THE COURSE OF SURVEY IS CONCERNED, THAT STATEMENT DOES NOT CAR RY ANY EVIDENTIARY VALUE. IT IS JUST AN INFORMATION. ON THE BASIS OF THIS STATEMENT NO ADDITION CAN BE MADE. IN ORDER TO BUTTRESS HIS CON TENTION, HE RELIED UPON THE TRIBUNALS ORDER IN THE CASE OF ACIT VS. AJOY B AKLI, ITA NO.312/KOL/2013 DATED 6.5.2015 WHEREIN THE TRIBUNAL HAS PLACED RELIANCE ON THE JUDGMENT OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. S. KHADARKHAN SON, 300 ITR 157 (MAD.). THE SLP AGAINST THIS DECISION HAS BEEN DISMISSED BY THE HONBLE SUP REME COURT, REPORTED IN (2012) 210 TAXMAN 248 (SC). 7. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. THE LD.AO IS HARPING UPON THE RE PLY TO QUESTION NO.20 OF THE STATEMENT GIVEN BY THE MANAGING DIRECTOR OF THE ASSESSEE- ITA NO.2143/AHD/2011 5 COMPANY DURING THE COURSE OF SURVEY. THIS REPLY HA S BEEN REPRODUCED BY THE AO ON PAGE NO.2 OF THE ASSESSMENT ORDER. WE HAVE PERUSED THIS REPLY. THE MD HAS RETRACTED THIS STATEMENT AND WRO TE A LETTER TO ADI OF THE DEPARTMENT ON 3.1.2007. IN HIS LETTER, THE MD HAS ALLEGED THAT SUCH DISCLOSURE WAS TAKEN FROM HIM UNDER PRESSURE. THU S, IT IS A RETRACTED STATEMENT. APART FROM THIS STATEMENT, THERE IS NOT HING ON RECORD, WHICH CAN CORROBORATE THIS STATEMENT. IN OTHER WORDS, TH ERE IS NO MATERIAL FOUND DURING THE COURSE OF SURVEY, WHICH CAN SUGGES T UNACCOUNTED INCOME POSSESSED BY THE ASSESSEE-COMPANY OF RS.2.00 CRORES. THE ISSUE REGARDING EVIDENTIARY VALUE OF THE STATEMENT TAKEN DURING THE COURSE OF SURVEY, HAS FALLEN FOR CONSIDERATION BEFORE THE HON BLE KERALA HIGH COURT IN THE CASE OF PAUL MATHEWS AND SONS (2003) 2 63 ITR 101 (KER). ACCORDING TO THE HONBLE KERALA HIGH COURT, DURING THE COURSE OF SURVEY, THE OFFICER COULD RECORD THE STATEMENT OF A PERSON UNDER SUB- SECTION 3(III) OF SECTION 133A OF THE INCOME TAX AC T. THIS CLAUSE AUTHORIZES THE AUTHORITY TO RECORD A STATEMENT OF A NY PERSON WHICH MAY BE USEFUL FOR OR RELEVANT TO ANY PROCEEDINGS UNDER THE ACT. HOWEVER, THE OFFICER IS NOT AUTHORIZED TO RECORD THE STATEMENT O N OATH, AND HENCE, THE STATEMENT TAKEN DURING THE COURSE OF SURVEY, HAS NO EVIDENTIARY VALUE. IT IS SIMPLY AN INFORMATION, WHICH CAN BE USED FOR COR ROBORATION PURPOSE FOR DECIDING ANY ISSUE IN FAVOUR OR AGAINST THE ASS ESSEE. THE OBSERVATIONS MADE BY THE HONBLE KERALA HIGH COURT ON PAGE NO.108 OF THE JOURNAL ARE WORTH TO NOTE. IT READS AS UNDER: ..SECTION 133A(3)(III) ENABLES THE AUTHORITY TO RE CORD THE STATEMENT OF ANY PERSON WHICH MAY BE USEFUL FOR, OR RELEVANT TO, ANY PROCEEDING UNDER THE ACT. SECTION 133A, HOWEVER , ENABLES THE INCOME-TAX AUTHORITY ONLY TO RECORD ANY STATEMENT O F ANY PERSON ITA NO.2143/AHD/2011 6 WHICH MAY BE USEFUL, BUT DOES NOT AUTHORISE TAKING ANY SWORN STATEMENT. ON THE OTHER HAND, WE FIND THAT SUCH A P OWER TO EXAMINE A PERSON ON OATH IS SPECIFICALLY CONFERRED ON THE AUTHORISED OFFICER ONLY UNDER SECTION 132 (4) OF TH E INCOME-TAX ACT IN THE COURSE OF ANY SEARCH OR SEIZURE. THUS, THE I NCOME-TAX ACT, WHENEVER IT THOUGHT FIT AND NECESSARY TO CONFER SUC H POWER TO EXAMINE A PERSON OH OATH, THE SAME HAS BEEN EXPRESS LY PROVIDED WHEREAS 'SECTION 133A DOES NOT EMPOWER ANY INCOME-T AX OFFICER TO EXAMINE ANY PERSON ON OATH. THUS, IN CONTRADISTI NCTION TO THE POWER UNDER SECTION 133A, SECTION 132(4) OF THE INC OME-TAX ACT ENABLES THE AUTHORISED OFFICER, TO EXAMINE A PERSON ON OATH AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH EXAMI NATION CAN ALSO BE USED IN EVIDENCE UNDER THE INCOME-TAX ACT. ON THE OTHER HAND, WHATEVER STATEMENT IS RECORDED UNDER SECTION 133A OF THE INCOME-TAX ACT IT IS NOT GIVEN ANY EVIDENTIARY VALU E OBVIOUSLY FOR THE REASON THAT THE OFFICER IS NOT AUTHORISED TO AD MINISTER OATH AND TO TAKE ANY SWORN STATEMENT WHICH ALONE HAS EVIDENT IARY VALUE AS CONTEMPLATED UNDER LAW. THEREFORE, THERE IS MUCH FO RCE IN THE ARGUMENT OF LEARNED COUNSEL FOR THE APPELLANT THAT THE STATEMENT ELICITED DURING THE SURVEY OPERATION HAS NO EVIDENT IARY VALUE AND THE INCOME-TAX OFFICER WAS WELL AWARE OF THIS' 8. SIMILARLY, THE HONBLE MADRAS HIGH COURT HAS ALS O CONCLUDED THAT STATEMENT RECORDED DURING THE COURSE OF SURVEY HAS NO EVIDENTIARY VALUE. THE SLP AGAINST THE DECISION OF THE HONBLE MADRAS HIGH COURT HAS ALSO BEEN DISMISSED BY THE HONBLE SUPREME COURT. THE L D.COUNSEL FOR THE ASSESSEE HAS PLACED ON RECORD COPY OF THE JUDGMENT OF THE HONBLE SUPREME COURT AS ANNEXURE-A WITH THE CHART. 9. ON PERUSAL OF THE RECORD, WE FIND THAT THE REVEN UE FAILED TO COLLECT ANY OTHER MATERIAL DURING THE COURSE OF SURVEY, AND ACCORDINGLY, ON THE BASIS OF THE STATEMENT GIVEN WITHOUT OATH, ADDITION CANNOT BE MADE. THEREFORE, THE LD.CIT(A) HAS RIGHTLY DELETED THE AD DITION. ITA NO.2143/AHD/2011 7 10. IN THE NEXT GROUND OF APPEAL, THE GRIEVANCE OF THE REVENUE IS THAT THE LD.CIT(A) HAS ERRED IN EXCLUDING THE AMOUNT OF RS.2.00 CRORES FROM THE BOOK PROFIT FOR THE PURPOSE OF SECTION 115JB. ON DUE CONSIDERATIONS OF THE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THIS GROUND DESERVES TO BE REJECTED SIMPLY FOR TWO REASONS, VIZ . ADDITION OF RS.2.00 CRORES HAS ALREADY BEEN DELETED, THEREFORE, THERE C ANNOT BE ANY ADJUSTMENT, AND (B) THE ACCOUNTS OF THE ASSESSEE AR E PREPARED IN ACCORDANCE WITH PART-II OF THE SCHEDULE-IV OF THE C OMPANIES ACT, 1956. ANY ADJUSTMENT CAN BE MADE IN THE BOOK PROFIT ONLY WITH REGARD TO THE ITEMS PROVIDED IN CLAUSE (A) TO (HA) APPENDED WITH EXPLANATION TO SECTION 115JB. NO ADJUSTMENT HAS BEEN PROVIDED IN SECTION 115JB. THE AO HAS NO POWER TO TINKER WITH THE ACCOUNTS OF THE ASSESSEE, WHICH HAVE BEEN PREPARED IN ACCORDANCE WITH PART-II OF SCHEDUL E-VI TO THE COMPANIES ACT. THE LD.CIT(A) HAS ASSIGNED THESE TW O REASONS, FOR BUTTRESSING HIS CONCLUSION ON THE SECOND REASONING, THE LD.CIT(A) PUT RELIANCE UPON THE JUDGMENT OF THE HONBLE SUPREME C OURT IN THE CASE OF APOLLO TYRES LTD. VS. CIT, 255 ITR 273 (SC). IN V IEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT IN THIS APPEAL OF THE REVENUE. IT IS DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON 4 TH MAY, 2016 AT AHMEDABAD. SD/- SD/- ( N.K. BILLAIYA ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 04/05/2016