ACIT, New Delhi V. Usha Rani Talla, New Delhi

ITA 3100/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3611 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 26-04-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 03-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K CHAND
• Assessee Lawyers: S KRISHNAN
• Keywords: Income from undisclosed sources; Search and seizure; Competent authority; Assessment record; Onus to prove; Retraction
• Section: 143(3); 133A; 69B; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H : NEW DELHI BEFORE SHRI RAJPAL YADAV, JM AND SHRI R.C.SHARMA, A M ITA NO.3100/DEL/2009 ASSESSMENT YEAR : 2005-06 ASSTT.COMMISSIONER OF INCOME TAX, CIRCLE-25(1), NEW DELHI. VS. SMT.USHA RANI TALLA, 32-A/78, PUNJABI BAGH WEST, NEW DELHI. PAN NO.AEBPR3546P. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K.CHAND, SR.DR. RESPONDENT BY : SHRI S.KRISHNAN, CA. ORDER PER R.C.SHARMA, AM : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 23.4.2009 FOR THE AY 2005-06, IN THE MATTER OF ORDE R PASSED U/S 143(3) OF THE IT ACT. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FACTS IN BRIEF ARE THAT THERE WAS A SURVEY U/S 133A OF I.T. ACT AT THE BUSINESS PREMISES OF M/S VISHAL JEWELLERS, B-5, MOTI NAGAR, NEW DELHI ON 24.2.2005. DURING THE COURSE OF SURVEY, DISCREPANCY IN THE CASH AND PHYSICAL STOCK AND THE CASH AND STOCK MAINTAINED AS PER BOOKS OF ACCOUNT WAS FOUND. IT W AS EXPLAINED THAT M/S VISHAL GOLD & PRECIOUS STONES PVT.LTD. WAS CARRYING ON BUS INESS FROM THE SAID PREMISES ON THE DATE OF SURVEY, ACCORDINGLY DISCREPANCY IN T HE STOCK AND CASH FOUND WAS REQUIRED TO BE EXPLAINED BY THEM. ON THE DATE OF S URVEY, THE ASSESSEE SMT.USHA RANI TALLA, WAS CALLED AT THE BUSINESS PREMISES FRO M HER HOME IN THE NIGHT AND ASKED TO SIGN THE STATEMENT OF SURRENDER OF RS.20 L AKHS TOWARDS RENOVATION OF THE SHOWROOM AND RS.14 LAKHS CASH AVAILABLE IN A BAG AT SHOP. THEREAFTER, IN THE NIGHT, STATEMENT OF SMT.USHA RANI TALLA WAS RECORDE D WHEREIN SHE SURRENDERED A SUM OF RS.20 LAKHS ON RENOVATION AND RS.14 LAKHS CA SH LYING AT SHOP. CONTENTION 2 OF THE ASSESSEE WAS THAT HER HUSBAND WHO WAS PARTNE R IN M/S VISHAL JEWELLERS, WAS AN ACUTE DIABETIC PATIENT AND WAS MADE TO SIT IN TH E SHOP BY THE VISITING OFFICIALS FOR LONG HOURS AND WAS FEELING VERY MUCH DISTURBED AND DEPRESSED, WHEN ASSESSEE HAD NO OTHER CHOICE EXCEPT TO SIGN THE STATEMENT RE CORDED BY THE VISITING OFFICIALS. A LETTER DATED 3.3.2005 WAS GIVEN TO THE ADDITIONAL COMMISSIONER OF INCOME TAX, WARD-25(3), NEW DELHI UNDER WHOSE GUIDANCE SURVEY W AS CONDUCTED WHEREIN IT WAS STATED THAT POST DATED CHEQUES OF RS.10,14,400/ - HAD BEEN OBTAINED FROM THE ASSESSEE SMT.USHA RANI TALLA, WHICH CHEQUES ARE NOT ISSUED FROM HER AND SHE HAD CATEGORICALLY DENIED TO HAVE SPENT ANY AMOUNT ON RE NOVATION OF THE SHOWROOM DURING THE YEAR UNDER CONSIDERATION AND THAT CASH O F RS.14 LAKHS ALLEGED AS BELONGING TO HER DID NOT IN FACT BELONG TO SMT.USHA RANI TALLA NOR HAS BEEN HANDED OVER BACK TO HER BY THE VISITING OFFICIALS. THE SAID CASH WAS HANDED OVER TO THE DIRECTORS OF M/S VISHAL GOLD & PRECIOUS STON ES PVT.LTD., WHICH WAS CARRYING ON BUSINESS AT PREMISES B-5, MOTI NAGAR, N EW DELHI, WHICH COMPANY HAD AGREED TO OFFER THE CORRECT AMOUNT OF TAX PAYAB LE THEREON. IT WAS ALSO STATED IN THE LETTER THAT CHEQUES COLLECTED MAY NOT BE PRESEN TED AND THE COMPANY VIZ. M/S VISHAL GOLD & PRECIOUS STONES PVT.LTD. MAY BE INTIM ATED THE CORRECT AMOUNT OF TAX PAYABLE, WHICH WOULD BE DEPOSITED BY THE COMPAN Y AS ADMITTED BY THEM SEPARATELY. IN THE RETURN OF INCOME FILED, THE ASS ESSEE DID NOT OFFER THE AMOUNT OF SURRENDER. HOWEVER, THE AO ADDED BOTH THE AMOUNTS IN THE RETURNED INCOME WHILE MAKING ASSESSMENT U/S 143(3). 2.1 IN AN APPEAL FILED BEFORE THE CIT(A), THE ADDIT ION MADE ON ACCOUNT OF SURRENDER OF RS.20 LAKHS ON ACCOUNT OF RENOVATION O F SHOWROOM AND RS.14 LAKHS CASH WAS DELETED BY THE CIT(A). THE CIT(A) OBSERVE D THAT SURVEY WAS CONDUCTED IN THE CASE OF NON EXISTING FIRM ON 24.2.2005 AND I NVENTORY OF CASH WAS PREPARED FROM THE OFFICE PREMISES OF THE COMPANY M/S VISHAL GOLD & PRECIOUS STONES PVT.LTD. THE INVENTORY OF CASH HAS BEEN PREPARED I N THE NAME OF M/S VISHAL JEWELLERS. TOTAL CASH OF RS.44,87,400/- WAS FOUND AND CASH BALANCE AS PER BOOKS OF ACCOUNT OF COMPANY WAS RS.30,87,400/-. IT WAS C LAIMED BY THE ASSESSEE THAT 3 THE STATEMENT OF SMT.USHA RANI TALLA WAS RECORDED U NDER DURESS AND SHE WAS MADE TO SIGN THE PAPER WHICH SHE DID WITHOUT EVEN S EEING THE CONTENTS. THIS FACT WAS BROUGHT TO THE NOTICE OF THE AO VIDE LETTER DAT ED 3.3.2005. THE CIT(A) RECORDED THE SUBMISSION OF THE ASSESSEE AT PAGES 7 & 8 OF HIS APPELLATE ORDER WHICH READS AS UNDER:- A SURVEY OPERATION WAS CONDUCTED AGAINST M/S VISHA L JEWELLERS AT B-5, MOTI NAGAR, DELHI ON 24.02.2005, WHICH FIRM WA S ALREADY DISSOLVED ON 06.05.2004. THE VISITING OFFICIALS GO T PREPARED INVENTORY OF STOCK, GOT IT VALUED FROM THE GOVERNME NT VALUER AND COUNTED CASH AVAILABLE IN THE SHOP WHEREFROM VISHAL GOLD & PRECIOUS STONES PVT.LTD. WAS FUNCTIONING. THUS TH E STOCK AND CASH FOUND, WAS EXPLAINABLE BY VISHAL GOLD & PRECIOUS ST ONES PVT.LTD. CARRYING ON BUSINESS FROM THE SAID PREMISES ON THE DATE OF SURVEY. THE SURVEY CONDUCTED AT B-5, MOTI NAGAR ON 24.02.20 05, STARTED IN THE MORNING HOURS 24.02.2005 AND CONTINUED TILL LAT E NIGHT. THE ASSESSEE WAS CALLED FROM HER HOME IN THE NIGHT AND WAS ASKED TO SIGN THE STATEMENT FOR SURRENDER OF A SUM OF RS.20, 00,000/- TOWARDS RENOVATION OF THE SHOWROOM AND ANOTHER RS.14,00,000 /- AS CASH AVAILABLE IN A BAG. HER HUSBAND, AN ACUTE DIABETIC PATIENT WAS MADE TO SIT IN THE SHOP BY THE VISITING OFFICIALS FOR LO NG HOURS AND WAS FEELING VERY MUCH DISTURBED/DEPRESSED, WHEN THE ASS ESSEE HAD NO OTHER CHOICE EXCEPT TO SIGN THE STATEMENT RECORDED BY THE VISITING OFFICIALS. THE ASSESSEE CATEGORICALLY DENIES TO HAVE SPENT ANY AMOUNT ON THE RENOVATION OF THE SHOWROOM DURING THE YEAR UNDER CO NSIDERATION I.E. FINANCIAL YEAR 2004-05. THE ASSESSEE SPENT ABOUT O VER RS.10,00,000/- 4-5 YEARS EARLIER AND THE AMOUNT WAS SPENT OUT OF ASSESSEES BANK ACCOUNT. THE CASH OF RS.14,00,000/- IN A BAG AVAILABLE IN TH E SHOP DID NOT BELONG TO THE ASSESSEE NOR ANY SUCH AMOUNT WAS HAND ED OVER BACK TO THE ASSESSEE BY THE VISITING OFFICIALS. THE VISITI NG OFFICIALS CONCLUDED THE SURVEY AFTER GETTING THREE CHEQUES FR OM RAJINDER KUMAR, VIKRAM TALLA AND USHA RANI AFTER RECORDING S TATEMENTS OF THE FAMILY MEMBERS, DETERMINING CERTAIN ARBITRARY T AXES PAYABLE, WHICH WERE DISPUTED IMMEDIATELY, AS NOT PAYABLE. T HUS THE SURRENDERS WERE WITHDRAWN IMMEDIATELY, TO WHICH THE DEPARTMENT AGREED AND DID NOT PRESENT THE CHEQUES FOR PAYMENT. NO ADDITION ON 4 ACCOUNT OF INCOME FROM UNDISCLOSED SOURCES, ON THE BASIS OF A STATEMENT RECORDED IN AN INVALID AND AB-INITIO VOID SURVEY U/S 133-A OF THE INCOME TAX ACT, 1961 WOULD BE JUSTIFIED, IN THE LIGHT OF THE ABOVE FACTS & CIRCUMSTANCES. 2.2 THE CIT(A) CALLED FOR THE ASSESSMENT RECORDS AN D AFTER EXAMINING THE SAME, HE OBSERVED THAT THE SAID LETTER INDICATED BY THE ASSESSEE WAS KEPT IN THE ASSESSMENT FOLDER, HOWEVER THE AO HAS NEITHER MADE REFERENCE TO THE SUBMISSIONS NOR REBUTTED THE SUBMISSION OF THE COUNSEL. HE FUR THER OBSERVED THAT THE AO HAS SOLELY RELIED ON THE STATEMENT RECORDED ON THE DATE OF SURVEY IN THE NIGHT, WHICH WAS RETRACTED BY THE ASSESSEE. THE CIT(A) ALSO REF ERRED TO THE DECISION OF AHMEDABAD BENCH OF TRIBUNAL IN THE CASE OF PRAMUKH BUILDERS WHEREIN IT WAS HELD THAT THERE BEING NO SPECTER OF EVIDENCE REGARD ING UNDISCLOSED INCOME, ADDITION MADE ONLY ON THE BASIS OF STATEMENT GIVEN IN A STATE OF CONFUSION AND LATER RETRACTED, COULD NOT BE SUSTAINED EITHER IN PART OR AS A WHOLE. IT WAS ALSO HELD THAT THERE MAY NOT BE ANY EVIDENCE OF COERCION BEING EXE RCISED BY THE DEPARTMENTAL OFFICIALS, THERE MAY NOT BE ANY DURESS ALSO, BUT EX ISTENCE OF CONFUSION CANNOT BE RULED OUT AND THE REVISION OF EARLIER STATEMENT DOE S NOT REFLECT APPLICATION OF MIND BUT A STATE OF COMPOUNDED CONFUSION ONLY. ON THE B ASIS OF ASSESSMENT RECORDS, THE CIT(A) RECORDED A FINDING THAT NO ADDITION CAN BE M ADE SOLELY ON THE BASIS OF STATEMENT, THE AO HAS NOT BROUGHT ANYTHING ON RECOR D THAT SMT.USHA RANI TALLA HAD UNDISCLOSED INCOME ESPECIALLY KEEPING IN VIEW T HE FACT THAT CASH WAS FOUND BY SURVEY TEAM IN THE SHOP OF M/S VISHAL GOLD AND PREC IOUS STONES (P) LTD., NO ADDITION WAS WARRANTED IN THE HANDS OF SMT.USHA RAN I TALLA WHO WAS NEITHER OWNER NOR DIRECTOR IN THE COMPANY. WITH REGARD TO ADDITION OF RS.20 LAKHS ON ACCOUNT OF RENOVATION, THE CIT(A) OBSERVED THAT THE AO HAS TREATED RS.20 LAKHS AS UNDISCLOSED INVESTMENT OF SMT.USHA RANI TALLA U/S 6 9B OF THE ACT. THE PROVISIONS OF SECTION 69B CAN BE INVOKED ONLY IF - IT IS FOUND THAT THE ASSESSEE HAS MADE INVESTMENT O R THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY BULLION, JEWELLERY OR OTHER VAL UABLE ARTICLES, AND 5 - IT IS FOUND THAT THE AMOUNT EXPENDED ON MAKING SUCH INVESTMENT OR IN ACQUIRING SUCH BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE EXCEEDS THE AMOUNT RECORDED IN THAT BEHALF IN THE BOOKS OF ACCO UNT MAINTAINED BY THE ASSESSEE, AND - EITHER THE ASSESSEE OFFERS NO EXPLANATION ABOUT SUC H EXCESS AMOUNT, OR THE EXPLANATION OFFERED BY HIM IS NOT SATISFACTORY. 2.3 AS PER CIT(A), THE ABOVE CIRCUMSTANCES ARE CUMU LATIVE. IF ALL THESE CIRCUMSTANCES EXIST, THE EXCESS AMOUNT MAY BE DEEME D TO BE THE INCOME OF THE ASSESSEE FOR THE FINANCIAL YEAR IN WHICH SUCH INVES TMENT WAS MADE OR THE ASSESSEE BECAME THE OWNER OF BULLION, ETC. 2.4 THE CIT(A) FURTHER OBSERVED THAT THE LEGAL FICT ION ENACTED IN SECTION 69B COMES INTO EFFECT ONLY WHERE ALL THE ABOVE CIRCUMST ANCES DO FACTUALLY EXIST. THE ONUS TO PROVE THE EXISTENCE OF ALL THESE CIRCUMSTAN CES LIES ON THE DEPARTMENT. THUS, THERE IS NO ROOM OR SCOPE FOR MAKING ANY PRES UMPTION ABOUT THE EXISTENCE OF ANY OF THE REQUISITE CIRCUMSTANCES. THE CIT(A) STATED THAT THE COMMENTARY ON INCOME TAX LAW BY CHATURVEDI & PITHISARIA OBSERVES AS UNDER:- PER CHATURVEDI & PITHISARIA COMMENTARY ON INCOME TA X LAW : SECTION 69/69B PAGE 3211 : VOLUME 25 TH EDITION IT MAY BE NOTED THAT THE LEGAL FICTION ENACTED IN SECTION 69B COMES INTO EFFECT ONLY WHERE ALL THE ABOVE CIRCUMSTANCES DO FA CTUALLY EXIST. THE ONUS TO PROVE THE EXISTENCE OF ALL THESE CIRCUMSTANCES LIES ON THE DEPARTMENT. THUS, THERE IS NO ROOM OR SCOPE FOR MAKING ANY PRESUMPTION ABOU T THE EXISTENCE OF ANY OF THE REQUISITE CIRCUMSTANCES. 3. IN VIEW OF THE ABOVE, THE CIT(A) OBSERVED THAT A O HAS SOLELY RELIED ON THE STATEMENT DURING THE COURSE OF SURVEY CONDUCTED IN THE CASE OF NON-EXISTING FIRM M/S VISHAL JEWELLERS. THE ASSESSEE WAS NEITHER PAR TNER IN THE ERSTWHILE FIRM NOR IS 6 DIRECTOR OF THE COMPANY DOING THE BUSINESS AT THE S AID PREMISES. THE CIT(A) OBSERVED THAT THE STATEMENT RECORDED UNDER DURESS W AS RETRACTED VIDE LETTER DATED 3.3.2005, NEITHER ANY EVIDENCE, WHATSOEVER, WAS FOU ND DURING THE SURVEY WHICH SHOULD INDICATE THAT THE ASSESSEE HAS MADE UNEXPLAI NED EXPENDITURE/INVESTMENT IN THE SHOW ROOM/PREMISES WHICH IS PARTLY RECORDED IN THE BOOKS OF ACCOUNT NOR THE PREMISES/SHOW ROOM WHERE THE SURVEY WAS CONDUCTED W AS REFERRED TO THE VALUATION OFFICER TO ASCERTAIN THE VALUE OF THE REN OVATION CARRIED OUT BY THE ASSESSEE. THEREAFTER, BY MAKING REFERENCE TO THE D ECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF P.V.KALYANASUNDARAM 282 ITR 259 WHEREIN IT WAS OBSERVED THAT REFERENCE OF PROPERTY TO THE VALUATIO N OFFICER IS CRUCIAL FACT TO VALUE THE PROPERTY, THE FAILURE OF NON REFERRING THE PROP ERTY FOR VALUATION IS FATAL FOR THE REVENUE. THIS DECISION OF HON'BLE MADRAS HIGH COUR T WAS AFFIRMED BY THE HON'BLE SUPREME COURT IN THE CASE REPORTED AT 294 I TR 49. ON THE BASIS OF THIS JUDGMENT, THE CIT(A) OBSERVED THAT MERELY A DECLARA TION IN THE FORM OF A STATEMENT MADE BY THE ASSESSEE IS NOT ADEQUATE TO A SCERTAIN THE ACTUAL VALUE OF PROPERTY, OR INVESTMENT THEREIN PER-SE. THE CIT(A) ALSO OBSERVED THAT DESPITE RETRACTION MADE BY THE ASSESSEE FROM HER STATEMENT OF HAVING INVESTED RS.20 LAKHS IN THE RENOVATION OF BUILDING, THE AO DID NOT REFER THE MATTER TO THE VALUATION OFFICER. AS PER CIT(A), THE ONUS TO PROVE THE EXIS TENCE OF ALL CIRCUMSTANCES AS MENTIONED IN THE STATUTE LIES ON THE DEPARTMENT, TH ERE IS NO ROOM OR SCOPE FOR MAKING ANY PRESUMPTION ABOUT WHAT THE EXISTENCE OF ANY OF THE CIRCUMSTANCES. KEEPING IN VIEW THE PHRASEOLOGY OF SECTION 69B OF T HE ACT, IT WAS HELD BY THE CIT(A) THAT THE SO-CALLED STATEMENT WITHOUT ANY EVI DENCE CANNOT BE MADE THE BASIS FOR EXPLAINING THE IMPLICATION OF THE EXPRESSION E XPENDED. THUS, THE ADDITION OF RS.20 LAKHS MADE BY THE AO ON ACCOUNT OF RENOVATION WAS ALSO DELETED BY THE CIT(A), AGAINST THIS ORDER OF CIT(A), THE REVENUE I S IN FURTHER APPEAL BEFORE US. 3.1 WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREF ULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND ALSO PERUSED THE STATE MENT RECORDED DURING THE COURSE OF SURVEY AS WELL AS MATERIAL PLACED ON RECORD TO W HICH OUR ATTENTION WAS INVITED 7 DURING THE COURSE OF HEARING. WE HAVE ALSO CONSIDE RED THE RATIO OF CASE LAWS CITED BY THE LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS AS WELL AS REFERRED TO BY THE LEARNED AR AND LEARNED DR DURING THE COURSE OF HEAR ING BEFORE US. FROM THE RECORD, WE FOUND THAT THERE WAS SURVEY U/S 133A OF THE ACT ON 24.2.2005 OF M/S VISHAL JEWELLERS, B-5, MOTI NAGAR, NEW DELHI. DURI NG COURSE OF SURVEY, IT WAS FOUND BY SURVEY OFFICIALS THAT M/S VISHAL GOLD & PR ECIOUS STONES PVT.LTD. WAS CARRYING ON BUSINESS FROM THE SAID PREMISES. DURIN G THE COURSE OF SURVEY, DISCREPANCY WAS FOUND IN THE CASH AS PHYSICALLY HEL D VIS--VIS CASH AS PER BOOKS OF ACCOUNT OF M/S VISHAL GOLD & PRECIOUS STONES PVT.LT D. AS PER BOOKS OF ACCOUNT, AVAILABLE CASH WAS RS.30,87,400/-, WHEREAS PHYSICAL CASH OF RS.44,87,400/- WAS FOUND AT THE SHOP. THUS, DIFFERENCE OF RS.14 LAKHS WAS PROPOSED FOR MAKING ADDITION. SURVEY TEAM ALSO OBSERVED THAT RENOVATIO N WAS CARRIED OUT IN THE PREMISES WHEREIN M/S VISHAL GOLD & PRECIOUS STONES (P) LTD. WAS CARRYING ON BUSINESS, ACCORDINGLY ADDITION OF RS.20 LAKHS WAS A LSO PROPOSED THEREIN. ASSESSEE SMT.USHA RANI TALLA WAS WIFE OF ONE OF THE PARTNERS OF M/S VISHAL JEWELLERS, SHE WAS CALLED FROM HER HOME IN THE NIGHT WHOSE STATEME NT WAS RECORDED AND THE SURRENDER OF RS.20 LAKHS WAS MADE ON ACCOUNT OF REN OVATION OF THE SHOWROOM AND RS.14 LAKHS ON ACCOUNT OF CASH FOUND IN THE SHOP. CONTENTION OF SMT. USHA RANI TALLA WAS THAT HER HUSBAND, AN ACUTE DIABETIC PATIE NT, WAS MADE TO SIT IN THE SHOP BY THE VISITING OFFICIALS FOR LONG HOUSE AND WAS FE ELING VERY MUCH DISTURBED AND DEPRESSED WHEN SHE HAD NO OTHER CHOICE EXCEPT TO SI GN THE STATEMENT RECORDED BY THE VISITING OFFICIALS. SMT.USHA RANI TALLA IN A L ETTER DATED 03.03.2005 GIVEN AFTER SURVEY CATEGORICALLY DENIES TO HAVE SPENT ANY AMOUN T ON THE RENOVATION OF THE SHOWROOM DURING THE YEAR UNDER CONSIDERATION. IT W AS ALSO SUBMITTED THAT AN AMOUNT OF RS.10 LAKHS WAS SPENT 4-5 YEARS EARLIER A ND THE SAME WAS DULY SHOWN IN THE ASSESSEES BANK ACCOUNT. IT WAS ALSO SUBMITTED THAT CASH OF RS.14 LAKHS FOUND AT THE SHOWROOM DID NOT BELONG TO HER. A LETTER OF RETRACTION WAS SUBMITTED TO THE DEPARTMENT AFTER THE SURVEY ON 3.3.2005 WHICH WAS F OUND BY CIT(A) IN THE ASSESSMENT FOLDER AND WHICH HAS BEEN DEALT IN DETAI L BY THE CIT(A) IN HIS APPELLATE ORDER. AS PER THE LETTER SUBMITTED AFTER THE SURVE Y, THE SURRENDER WAS WITHDRAWN 8 IMMEDIATELY, WHICH THE DEPARTMENT AGREED AND DID NO T PRESENT THE CHEQUES FOR PAYMENT. WITH REGARD TO SURRENDER OF RS.20 LAKHS M ADE IN THE SHOWROOM WHERE M/S VISHAL GOLD & PRECIOUS STONES PVT.LTD. WAS FOUN D TO BE CARRYING ON BUSINESS, NO CORROBORATIVE MATERIAL WAS EITHER FOUND BY SURVE Y TEAM NOR BROUGHT ON RECORD BY THE AO TO SUBSTANTIATE THE SURRENDER MADE BY SMT . USHA RANI TALLA. THE CIT(A) ALSO OBSERVED THAT EVEN AFTER THE RETRACTION OF HAVING MADE ANY INVESTMENT IN THE RENOVATION, THE AO WAS HAVING SUFFICIENT TIM E TO REFER THE MATTER FOR DETERMINING THE ACTUAL VALUE OF THE SHOWROOM, ITS C OST OF CONSTRUCTION, COST OF RENOVATION ETC., BUT NOTHING WAS DONE BY THE AO TO FIND OUT THE CORRECT STATE OF AFFAIRS. THE DEPARTMENTAL VALUATION CELL IS MEANT TO FIND OUT THE CORRECT COST OF CONSTRUCTION AND WHICH IS FULLY SUPPORTED BY TECHNI CAL STAFF EMPLOYED THEREIN. IN THE INSTANT CASE, IMMEDIATELY AFTER SURVEY, THE ASS ESSEE SMT.USHA RANI TALLA HAS RETRACTED AND FOR WHICH LETTER WAS DULY FILED WITH THE COMPETENT AUTHORITY, THE AMOUNT OF SURRENDER WAS ALSO NOT OFFERED IN THE RET URN OF INCOME. IT WAS UPON THE AO TO FIND OUT ACTUAL COST OF THE BUILDING AND RENO VATION TO SUBSTANTIATE THE STATEMENT GIVEN BY ASSESSEE WHEREIN SURRENDER WAS M ADE. STATEMENT SO RECORDED BY THE SURVEY TEAM WAS ALSO ALLEGED TO BE UNDER INF LUENCE, COERCION AND UNDER CONFUSED STATE OF MIND. IN THE LETTER OF RETRACTIO N THE FACTUAL POSITION WAS STATED BY SMT. USHA RANI TALLA TO THE EFFECT THAT HER HUSBAND , AN ACUTE DIABETIC PATIENT, WAS MADE TO SIT IN THE SHOP BY THE VISITING OFFICIALS F OR LONG HOURS AND WAS FEELING VERY MUCH DISTURBED/DEPRESSED, WHEN SHE WAS CALLED IN TH E NIGHT AND ASKED TO SIGN THE STATEMENT OF SURRENDER, SHE HAD NO OTHER CHOICE EXC EPT TO SIGN THE STATEMENT RECORDED BY THE VISITING OFFICIALS. IN THE FACTS A ND CIRCUMSTANCES OF INSTANT CASE, THERE MAY NOT BE ANY EVIDENCE OF COERCION OR UNDER INFLUENCE BEING EXERCISED BY THE DEPARTMENTAL OFFICERS, BUT THE EXISTENCE OF DUR ESS/DISTURBED STATE OF MIND AT SUCH CRUCIAL MOMENT CANNOT BE RULED OUT. A REFEREN CE WAS ALSO MADE TO THE KELKAR COMMITTEES REPORT 258 ITR 40 (STATUTE) WH EREIN THE COMMITTEE HAS MADE A CATEGORICAL REFERENCE TO THE PRACTICE ADOPTE D BY THE DEPARTMENTAL OFFICERS OBTAINING FORCED CONFESSIONS FROM THE ASSESSEE DURI NG THE COURSE OF SEARCH/SURVEY OPERATIONS. THE FINANCE MINISTER IN HIS BUDGED SPE ECH FOR THE FY 2003-04 9 OBSERVED THAT IN VIEW OF THE RECOMMENDATIONS OF THE KELKAR COMMITTEE, IT HAS BEEN DECIDED THAT NO CONFESSION SHALL BE OBTAINED D URING SEARCH AND SEIZURE OPERATIONS. CBDT VIDE THEIR LETTER NO.F.NO.286/2/2 003-IT(INV.) DATED 10.3.2003 POINTED OUT THAT INSTANCES HAVE COME TO THE NOTICE OF THE BOARD WHERE ASSESSEES HAVE BEEN FORCED TO CONFESS THE UNDISCLOSED INCOME DURING THE COURSE OF SEARCH AND SEIZURE AND SUCH CONFESSIONS, IF NOT BASED ON C REDIBLE EVIDENCE, ARE LATER ON RETRACTED BY THE CONCERNED ASSESSEES. THE BOARD TH EREFORE ADVISED THE FIELD OFFICERS THAT NO ATTEMPT SHOULD BE MADE TO OBTAIN C ONFESSION AS TO THE UNDISCLOSED INCOME. THE BOARD FURTHER ADVISED THAT IN RESPECT O F PENDING ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICERS SHOULD RELY ON THE EVIDENCE GATHERED DURING THE COURSE OF SEARCH OR THEREAFTER WHILE FRAMING TH E RELEVANT ASSESSMENT ORDERS. HEAVILY RELYING UPON THE AFORESAID RECOMMENDATIONS OF THE KELKAR COMMITTEE AS WELL AS DIRECTIONS ISSUED BY THE CBDT TO THE FIELD OFFICERS, IT WAS STRONGLY URGED BY LEARNED AR THAT ADMISSION REGARDING RENOVATION E XPENDITURE AND CASH HAVING BEEN OBTAINED BY THE SURVEY PARTY UNDER COERCION AN D DISTURBED MENTAL STATE OF AFFAIRS, SAME CANNOT BE MADE THE BASIS OF ADDITION, WHEN NOTHING WAS FOUND BY THE DEPARTMENT DURING SURVEY TO SUPPORT THE STATEMENT O F LADY. FURTHERMORE, RELIANCE WAS PLACED ON THE PROPOSITION LAID DOWN BY THE HON' BLE SUPREME COURT IN THE CASE OF PULLANGODE RUBBER PRODUCE CO. LTD. 91 ITR 18, WHEREIN IT WAS HELD THAT AN ADMISSION IS NOT CONCLUSIVE AND ASSESSEE IS FULLY E NTITLED TO REBUT AND CONTROVERT THE ADMISSION. FURTHERMORE, HON'BLE SUPREME COURT IN THE CASE OF SHRAVAN SINGH R.S. 1957 SC 637 HELD THAT THE CONFESSION OF AN A CCUSED WOULD NEED CORROBORATION TO CONVICT THE ACCUSED. HON'BLE DELH I HIGH COURT IN THE CASE OF S. ARJUN SINGH VS. CWT 175 ITR 91 HELD THAT AN ADMIS SION IS AN IMPORTANT PIECE OF EVIDENCE BUT IT IS NOT CONCLUSIVE AND IT IS OPEN TO THE ASSESSEE TO SHOW THAT IT IS INCORRECT. IT IS AN UNDISPUTED FACT THAT NO DOCUME NTS OR PAPERS WERE FOUND DURING THE COURSE OF SURVEY INDICATING ANY EXPENDITURE HAV ING BEEN INCURRED BY THE ASSESSEE FOR RENOVATION OF THE SHOWROOM OR ANY CASH OF THE ASSESSEE BEING LEFT AT THE SHOWROOM OF M/S VISHAL JEWELLERS, FROM WHERE M/ S VISHAL GOLD & PRECIOUS STONES PVT.LTD. WAS CARRYING ON ITS BUSINESS. HON' BLE PUNJAB & HARYANA HIGH 10 COURT IN THE CASE OF KRISHAN LAL 88 ITR 293 OBSER VED THAT IT IS AN ESTABLISHED PRINCIPLE OF LAW THAT A PARTY IS ENTITLED TO SHOW A ND PROVE THAT ADMISSION MADE BY HIM IS IN FACT NOT CORRECT AND TRUE. SUCH ADMISSIO N RAISES A PRESUMPTION AGAINST THE PERSONS MAKING THE ADMISSION BUT SUCH PRESUMPTI ON IS REBUTTABLE. 3.2 HON'BLE KERALA HIGH COURT IN THE CASE OF PAUL M ATHEWS & SONS 263 ITR 101 HELD THAT STATEMENT OF ASSESSEE RECORDED DURING THE COURSE OF SURVEY UNDER PROVISIONS OF SECTION 133A(3)(III) CAN BE SAID TO B E USEFUL AND RELEVANT TO THE ASSESSMENT PROCEEDINGS ONLY IN THE CIRCUMSTANCES WH EN THERE IS A MATERIAL ON RECORD TO PROVE EXISTENCE OF ANY OF THE ACTIVITIES ON THE BASIS OF WHICH DISCLOSURE IS STATED TO BE MADE. IT WAS CATEGORICALLY MENTION ED BY THE HONBLE HIGH COURT THAT STATEMENT RECORDED U/S 133A CANNOT BE GIVEN EV IDENTIARY VALUE AS SUCH EVIDENTIARY VALUE IS NOT ATTACHED WITH THE PROVISIO NS OF SECTION 133A OF THE ACT. THE ONLY BASIS FOR ADDITION AS PER AO IN THE INSTAN T CASE WAS THE STATEMENT OF THE ASSESSEE WITHOUT ANY CORROBORATIVE MATERIAL OR EVID ENCE ON RECORD. HON'BLE MADRAS HIGH COURT IN THE CASE OF S.KHANDAR KHAN CHA ND 214 CTR 589, OBSERVED THAT WHERE ASSESSEE HAD ADMITTED SUPPRESSE D INCOME BUT THERE WAS NO DOCUMENTARY EVIDENCE IN POSSESSION OF THE DEPARTMEN T, NO ADDITION CAN BE MADE ON THE BASIS OF SUCH STATEMENT. IN THIS CASE, HON BLE HIGH COURT REVIEWED ALL THE AVAILABLE JUDGMENTS ON THE POINT ALONGWITH CBDT INS TRUCTIONS DATED 10.3.2003 AND WENT TO THE EXTENT OF HOLDING THAT SECTION 133A DOES NOT EMPOWER ANY INCOME TAX AUTHORITIES TO EXAMINE ANY PERSON ON OATH AND H ENCE, SUCH STATEMENT HAS NOT EVIDENTIARY VALUE AND ANY ADMISSION MADE DURING SUC H STATEMENT CANNOT BY ITSELF BE MADE THE BASIS FOR ADDITION. AFTER CONSIDERING THE PROPOSITION OF LAW LAID DOWN IN THE CASE OF PULLANGODE RUBBER PRODUCE CO.LTD. (S UPRA), DR.S.C.GUPTA 248 ITR 782 (ALL), PAUL MATHEWS & SONS 263 ITR 101 (K ER), G.K.SENNIAPPAN 284 ITR 220 (MAD), THE HONBLE HIGH COURT HELD THAT AN ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID T HAT IT IS CONCLUSIVE AND IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT I T IS INCORRECT AND THAT THE ASSESSEE SHOULD BE GIVEN A PROPER OPPORTUNITY TO SH OW THAT THE BOOKS OF ACCOUNT DID NOT CORRECTLY DISCLOSE THE CORRECT STATE OF AFF AIRS. IT WAS ALSO OBSERVED THAT IN 11 CONTRADISTINCTION TO THE POWER UNDER SECTION 133A, SECTION 132(4) OF THE ACT ENABLES THE AUTHORIZED OFFICER TO EXAMINE A PERSON ON OATH AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH EXAMINATION CAN ALS O BE USED IN EVIDENCE UNDER THE IT ACT. ON THE OTHER HAND, WHATEVER STATEMENT IS RECORDED U/S 133A OF THE ACT, IT IS NOT GIVEN ANY EVIDENTIARY VALUE OBVIOUSL Y FOR THE REASON THAT THE OFFICER IS NOT AUTHORIZED TO ADMINISTER OATH AND TO TAKE AN Y SWORN STATEMENT WHICH ALONE LENDS EVIDENTIARY VALUE AS CONTEMPLATED UNDER THE L AW. 3.3 APPLYING THE ABOVE PROPOSITION OF LAW TO THE FA CTS OF THE CASE, WE FOUND THAT CATEGORICAL FINDING WAS RECORDED BY THE CIT(A) TO THE EFFECT THAT NO MATERIAL WAS BROUGHT ON RECORD BY THE AO TO SUBSTANTIATE THA T ANY EXPENDITURE ON RENOVATION WAS INCURRED BY THE ASSESSEE DURING THE AY 2005-06, NOR THE AO HAS MADE ANY REFERENCE TO THE DVO TO FIND OUT CORRECT S TATE OF AFFAIRS, AND IT WAS MERELY ON THE BASIS OF STATEMENT GIVEN BY SMT.USHA RANI TALLA AT A DISTURBED STATE OF MIND, WHICH CANNOT BE MADE THE BASIS FOR MAKING THE ADDITION. SIMILARLY, NO MATERIAL WAS BROUGHT ON RECORD TO SUBSTANTIATE THAT THE CASH FOUND AT M/S VISHAL GOLD & PRECIOUS STONES PVT.LTD., CARRYING ON BUSINE SS AT B-5, MOTI NAGAR, NEW DELHI WAS BELONGING TO SMT.USHA RANI TALLA, ACCORDI NGLY NO ADDITION WAS WARRANTED IN HER HANDS MERELY BECAUSE SHE SIGNED TH E STATEMENT ACCEPTING THE SAME. 3.4 IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR DELETING THE AFORESAID ADDITIONS MADE ME RELY ON THE BASIS OF STATEMENT, WITHOUT BRINGING ON RECORD ANY MATERIAL MUCH LESS A COGENT MATERIAL. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 25 TH JUNE, 2010. SD/- SD/- (RAJPAL YADAV) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 25.06.2010. VK. 12 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR