A.C.I.T., Central Circle, Agra V. M/s Varun Maheshwari, Agra

ITA 349/AGR/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 72771 (ITAT-AGRA)
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 03-02-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 22-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ATHESHAM ANSARI
• Assessee Lawyers: MAHESH AGARWAL
• Keywords: Income from undisclosed sources; Search and seizure
• Section: 68; 142(1); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMB ER ITA NO. 349 & 350/AGRA/2013 ASST. YEAR :2006-07 & 2007-08 A.C.I.T., CENTRAL CIRCLE, VS. M/S. VARUN MAHESHW ARI AGRA. 25/111B-9A, GANDHI NAGAR, AGRA. (PAN: AGTPM 6997 P) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ATHESHAM ANSARI, JR. D.R. RESPONDENT BY` : SHRI MAHESH AGARWAL, C.A. DATE OF HEARING : 03.02.2014 DATE OF PRONOUNCEMENT : 07.02.2014 ORDER PER BHAVNESH SAINI, J.M.: BOTH THE APPEALS BY THE REVENUE ARE DIRECTED AGAIN ST DIFFERENT ORDERS OF LD. CIT(A)-I, AGRA DATED 06.09.2013 FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08, CHALLENGING THE DELETION OF ADDITION OF RS.10 LACS AND RS.15 LACS IN THE ABOVE ASSESSMENT YEARS U/S. 68 OF THE IT ACT. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE CASE OF THE ASSESSEE IS CONNECTED WITH SHANKER GUTKHA GROUP OF CASES, IN WHICH SEARCH U/S. 132(1) WAS CONDUCTED ON 30/31 ST JANUARY, 2008. SIMULTANEOUSLY, A SURVEY OPERATION U/S. 133A OF THE IT ACT ITA NOS. 349 & 350/AGRA/2013 2 WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASS ESSEE, M/S. MAYA COMMODITIES, PROPRIETOR SHRI VARUN MAHESHWARI (ASSESSEE) ON 30.0 1.2008, IN WHICH SEVERAL BOOKS OF ACCOUNT, DOCUMENTS ETC. WERE IMPOUNDED. DU RING THE COURSE OF SURVEY PROCEEDINGS, THE ASSESSEE HAS HIMSELF ADMITTED THAT INCOME OF RS.10 LACS AND 15 LACS IN BOTH THE YEARS IS UNEXPLAINED INCOME AND HA S ESCAPED ASSESSMENT AND SURRENDERED THE SAME AMOUNTS FOR TAXATION. HOWEVER, ON PERUSAL OF RETURN OF INCOME FILED BY THE ASSESSEE, IT WAS NOTICED THAT T HE ASSESSEE DID NOT SHOW THE SURRENDERED AMOUNT OF RS.10 LACS AND 15 LACS IN THE RETURN OF INCOME AND NO TAXES HAVE BEEN PAID ON THE SURRENDERED AMOUNT. THE RE-AS SESSMENT PROCEEDINGS HAVE BEEN INITIATED AFTER RECORDING THE REASONS AND IN C OMPLIANCE THEREOF, THE ASSESSEE FILED HIS RETURN OF INCOME UNDER CONSIDERATION ON 0 4.01.2011 DECLARING INCOME OF RS.1,45,633/- AND RS.1,21,402/-. THE ASSESSEE ALSO RAISED OBJECTIONS REGARDING INITIATION OF RE-ASSESSMENT PROCEEDINGS. THE QUESTI ONNAIRE DATED 04.03.2011 (PB-6) WAS ISSUED AND DETAILS FROM THE ASSESSEE WERE CALLE D FOR. THE ASSESSEE WAS ASKED TO EXPLAIN REGARDING SURRENDER OF INCOME MADE DURING T HE COURSE OF SURVEY TO WHICH THE ASSESSEE REPLIED THAT HE HAS MAINTAINED ALL REG ULAR BOOKS OF ACCOUNT, BILLS, VOUCHERS ETC. WHICH HAVE BEEN AUDITED BY THE CA AND NO MATERIAL DISCREPANCIES WERE REPORTED BY THE AUDITORS AFTER CONSIDERING THE IMPOUNDED DOCUMENTS. THEREFORE, NO SURRENDER AS ALLEGED WAS MADE IN THE RETURN OF INCOME. THE AO, HOWEVER, REFERRED TO THE STATEMENT RECORDED DURING THE COURSE OF SURVEY ON OATH IN ITA NOS. 349 & 350/AGRA/2013 3 WHICH THE ASSESSEE SURRENDERED UNDISCLOSED INCOME O F RS.10 LACS AND RS.15 LACS IN ASSESSMENT YEARS UNDER APPEALS AND ACCORDINGLY MADE BOTH THE ADDITION. THE ASSESSEE CHALLENGED THE ADDITIONS BEFORE THE LD. CI T(A) AND REITERATED THE STAND TAKEN BEFORE THE AO AND EXPLAINED THAT ASSESSEE MAI NTAINED ALL REGULAR BOOKS OF ACCOUNTS WITH VOUCHERS AND NO DISCREPANCIES WERE NO TED, THEREFORE, THERE IS NO QUESTION OF MAKING SURRENDER OF ANY INCOME. THE ASS ESSEE ALSO RELIED UPON THE BOARS CIRCULAR NO. 286 DATED 10.03.2003, IN WHICH BOARD HAS DIRECTED THAT DURING THE SEARCH AND SEIZURE OPERATION, THERE SHOULD BE F OCUS AND CONCENTRATION ON COLLECTION OF EVIDENCE OF INCOME AND NO ATTEMPT SHO ULD BE MADE TO OBTAIN CONFESSION AS TO THE UNDISCLOSED INCOME. THE ASSESS EE, THEREFORE, SUBMITTED THAT THERE WAS NO BASIS TO MAKE ANY SURRENDER OF INCOME BECAUSE NO UNACCOUNTED INCOME OR ANY CORROBORATIVE EVIDENCE WAS FOUND. THE REFORE, MERE RECORDING OF STATEMENT DURING THE SURVEY IS NOT ADMISSIBLE IN LA W AND RELIED UPON THE DECISION OF KERALA HIGH COURT IN THE CASE OF PAUL MATHEWS & SON S VS. CIT, 263 ITR 101 AND DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS. ANIL BHALLA, 322 ITR 191, IN WHICH IT WAS HELD THAT ADDITION COULD NOT BE SUSTAI NED IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE. THE ASSESSEE ALSO RELIED UP ON SEVERAL OTHER DECISIONS IN SUPPORT OF THE CONTENTION WHICH IS REPRODUCED IN TH E WRITTEN SUBMISSIONS OF THE ASSESSEE IN THE IMPUGNED ORDER. THE AO ALSO FILED R EMAND REPORT WHICH IS ALSO REPRODUCED IN THE APPELLATE ORDER. THE ASSESSEE SUB MITTED THAT IN THE ABSENCE OF ITA NOS. 349 & 350/AGRA/2013 4 ANY MATERIAL FOUND DURING THE COURSE OF SURVEY, ADD ITION MERELY ON THE BASIS OF STATEMENT OF THE ASSESSEE IS NOT PERMISSIBLE. THE L D. CIT(A) CONSIDERING THE CONTENTION OF THE ASSESSEE AND THE MATERIAL ON RECO RD AND OBJECTIONS OF THE AO, NOTED THAT THE DECISION IN THE CASE OF PAUL MATHEWS & SONS (SUPRA) CLEARLY SUPPORTS THE VIEW OF THE ASSESSEE THAT SECTION 133A DOES NOT EMPOWER ITO TO EXAMINE ANY PERSON ON OATH AND SUCH STATEMENT HAS N O EVIDENTIARY VALUE. THE LD. CIT(A) ALSO FOLLOWED THE INSTRUCTION NO. 286 OF THE BOARD (SUPRA) IN SUPPORT OF HIS FINDING THAT IN THE ABSENCE OF ANY MATERIAL, CONFES SIONAL SURRENDER SHOULD NOT BE OBTAINED. THE LD. CIT(A) ALSO NOTED THAT ON MERE ST ATEMENT RECORDED DURING THE SURVEY WITHOUT ANY CORROBORATIVE MATERIAL IS NOT CO RRECT. THE LD. CIT(A) IN SUPPORT OF HIS FINDINGS ALSO RELIED UPON SEVERAL DECISION O F DIFFERENT HIGH COURTS AND THE TRIBUNAL INCLUDING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF PULLANGODE RUBBER PRODUCE CO. LTD. VS. STATE OF KER ALA, 91 ITR 18, IN WHICH THE APEX COURT HELD THAT AN ADMISSION IS EXTREMELY AN I MPORTANT PIECE OF EVIDENCE, BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE AND IT IS O PEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT IS NOT CORRECT. THE LD. CIT(A) ALSO NOTED THAT WHEN STATEMENT IS RETRACTED, THE ONUS IS UPON THE DEPART MENT TO PROVE THAT THE STATEMENT WAS VOLUNTARY. THE LD. CIT(A) ALSO NOTED SEVERAL DE CISIONS ON THE POINT THAT STATEMENT RECORDED IN SURVEY HAS NO EVIDENTIARY VAL UE. THE LD. CIT(A) ALSO FOLLOWED THE ORDER OF THE ITAT, AGRA BENCH IN THE C ASE OF M/S. MAYA TRADING CO. ITA NOS. 349 & 350/AGRA/2013 5 (ITA NO. 31/AGRA/2012 DATED 05.10.2012) CONNECTED W ITH THE ASSESSEE, IN WHICH ON THE IDENTICAL MATTER, IT WAS HELD THAT NO ADDITI ON COULD BE MADE AGAINST THE ASSESSEE ON THE BASIS OF MERE ADMISSION. THE LD. CI T(A), THEREFORE, HELD THAT THE STATEMENT OF SURRENDER IS INCOMPLETE AND THAT THERE IS NOTHING ON RECORD TO SUBSTANTIATE THE SURRENDER MADE BY THE ASSESSEE DUR ING THE COURSE OF SURVEY. THEREFORE, SUCH STATEMENT WOULD LOSE EVIDENTIARY VA LUE AND ACCORDINGLY, BOTH THE ADDITIONS WERE DELETED. 3. THE LD. DR RELIED UPON THE ORDER OF THE AO. ON T HE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND REFERRED TO NOTICE U/S. 142(1) DATED 04.0 3.2011 (PB-6) AND REPLY FILED BY THE ASSESSEE TO THE SAME QUERY (PB-14) AND ALSO REF ERRED TO STATEMENT OF ASSESSEE RECORDED DURING THE COURSE OF SURVEY AND SUBMITTED THAT NO MATERIAL WAS FOUND DURING THE CURSE OF SURVEY TO PROVE THAT THE ASSESS EE HAD ANY UNACCOUNTED INCOME. THEREFORE, SURRENDER MADE DURING THE COURSE OF SURV EY WAS WITHOUT ANY BASIS AND WAS CORRECTLY RETRACTED. SUCH AN ADMISSION IS ALSO NOT ADMISSIBLE IN LAW. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD AND DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE OR DERS OF THE LD. CIT(A) IN DELETING BOTH THE ADDITIONS. IT IS NOT IN DISPUTE THAT NOTHI NG WAS FOUND INCRIMINATING AGAINST ITA NOS. 349 & 350/AGRA/2013 6 INTEREST OF ASSESSEE DURING THE COURSE OF SURVEY. T HE ADDITIONS WERE MADE MERELY ON THE BASIS OF SURRENDER MADE BY THE ASSESSEE ON T HE BASIS OF STATEMENT RECORDED DURING THE SURVEY. THE ASSESSEE, IN ANSWER TO QUEST ION NO. 3, IN WHICH THE AO ASKED TO EXPLAIN AS TO HOW MUCH BUSINESS IS DONE IN THE FIRM OF ASSESSEE AND WHAT IS ANNUAL INCOME, STATED TO HAVE MADE SURRENDER OF RS.10 LACS AND RS.15 LACS DURING THE COURSE OF SURVEY. NO QUESTION WAS ASKED TO THE ASSESSEE AS TO WHAT IS THE BASIS OF MAKING SUCH A SURRENDER OF INCOME. NO MATE RIAL IS ALSO REFERRED DURING THE COURSE OF STATEMENT TO SHOW IF ASSESSEE EARNED ANY UNACCOUNTED INCOME FOR THE ASSESSMENT YEARS UNDER APPEALS. THEREFORE, THERE WA S NO MATERIAL FOUND DURING THE COURSE OF SURVEY AGAINST THE ASSESSEE TO PROVE THAT THE ASSESSEE EARNED ANY UNDISCLOSED INCOME. THEREFORE, IT WAS MERE STATEMEN T OF ASSESSEE WITHOUT ANY BASIS FOR MAKING SURRENDER. THEREFORE, IT WAS CORRE CTLY RETRACTED BY THE ASSESSEE BECAUSE THE ADMISSION WAS NOT BASED ON CORRECT FACT S. THE ASSESSEE IN REPLY TO SHOW CAUSE NOTICE U/S. 142(1) WITH REGARD TO SURREN DERED INCOME ALSO EXPLAINED THAT HE IS MAINTAINING REGULAR BOOKS OF ACCOUNTS AN D VOUCHERS AND NO MATERIAL DISCREPANCY WAS FOUND TO MAKE ANY SURRENDER. THE AO ALSO NOTED IN THE ASSESSMENT ORDERS THAT DURING THE SURVEY SEVERAL BO OKS OF ACCOUNT AND DOCUMENTS WERE IMPOUNDED BUT NOTHING IS EXPLAINED IN THE ASSE SSMENT ORDER WHETHER THE SAME DISCLOSED ANY UNDISCLOSED INCOME EARNED BY THE ASSE SSEE. THUS, THERE IS NOTHING ON RECORD TO PROVE THAT ANY MATERIAL WAS FOUND TO INDI CATE EARNING OF UNDISCLOSED ITA NOS. 349 & 350/AGRA/2013 7 INCOME DURING THE SURVEY IN THE ASSESSMENT YEARS UN DER APPEALS. BOARDS CIRCULAR REFERRED TO ABOVE, THEREFORE, CLEARLY APPLY IN FAVO UR OF THE ASSESSEE ALONG WITH THE DECISIONS RELIED UPON BY THE LD. CIT(A) IN THE APPE LLATE ORDER FOR DELETING THE ADDITION. CONSIDERING THE TOTALITY OF FACTS AND CIR CUMSTANCES, WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. CIT(A) IN DELETING BO TH THE ADDITIONS. BOTH THE DEPARTMENTAL APPEALS HAVE NO MERIT AND ARE ACCORDIN GLY DISMISSED. 5. IN THE RESULT, BOTH THE DEPARTMENTAL APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (PRAMOD KUMAR) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY