DCIT, Circle - 2, Midnapore, Paschim Medinipur V. M/s. Grami Agro Pvt. Ltd., Paschim Medinipur

ITA 755/KOL/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4501 (ITAT-KOLKATA)
• Duration Of Justice: 5 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 08-06-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 16-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MD GHYAS UDDIN J
• Assessee Lawyers: T K CHAKRABORTY
• Keywords: Depreciation; Income from undisclosed sources; Non-deduction of tax; Block assessment; Onus to prove; Retraction; Revised return
• Section: 143(3); 142(1); 133A; 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.755/KOL/2011 ASSESSMENT YEARS:2007-08 DCIT, CIRCLE-2, MIDNAPORE, SAHOO BHAWAN, KSHUDIRAM NGAR, P.O. MIDNAPORE, DIST. PASCHIM MEDINIPUR / V/S . M/S GRAMI AGRO PVT. LTD. JAMDA, JHARGRAM, DIST. PASCHIM MEDINIPUR, PIN. 721 507 [ PAN NO.AABCG 0207 F ] /APPELLANT .. /RESPONDENT /BY APPELLANT MD. GHYAS UDDIN, JCIT-DR /BY RESPONDENT SHRI T.K.CHAKRABORTY, AR /DATE OF HEARING 08-06-2016 /DATE OF PRONOUNCEMENT 22-07-2016 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-XXXVI, KOLKATA DATED 28.01.201 0. ASSESSMENT WAS FRAMED BY ACIT, RANGE 1 & 2, MIDNAPORE U/S 143(3) OF THE I NCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORD ER DATED 24.12.2009 FOR ASSESSMENT YEAR 2007-08. THE GROUNDS RAISED BY THE REVENUE PER ITS APPEAL ARE AS UNDER:- I. THE LD. CIT(A)-XXXVI, KOLKATA IS ERRED IN DELET ING THE ADDITIONS OF RS.50,00,000/- MADE BY THE AO AT THE TIME OF ASSESS MENT U/S. 143(3) TOWARDS INCOME FROM UNDISCLOSED SOURCES BASED ON VOLUNTARY DISCLOSURE OF THE ASSESSEE DURING THE COURSE OF SURVEY U/S. 133A ON 2.6.03.200 7. ITA NO.755/KOL/2011 A.Y.20 07-08 DCIT, CIR-2, MID. V. M/S GRAMI AGRO PVT. LTD. PAGE 2 II. THE LD. CIT(A) IS ERRED IN DELETING THE ADDITIO NS OF RS.9,87,919/- MADE U/S 40(A)(IA) FOR NON-DEDUCTION OF TAX (TDS) IN VIOLATI ON OF THE PROVISIONS OF SECTION 194C OF THE IT ACT, 1961. III. THE APPELLANT CRAVES LEAVE TO ADD, ALTER/OR AM END ANY OF THE GROUNDS OF APPEAL DURING THE COURSE OF HEARING. SHRI T.K.CHAKRABORTY, LD. AUTHORIZED REPRESENTATIVE APPEARED ON BEHALF OF ASSESSEE AND MD. GHYAS UDDIN, LD. DEPARTMENTAL REPRESENTATIV E APPEARED ON BEHALF OF REVENUE. 2. FIRST ISSUE RAISED BY REVENUE IS AS REGARDS THAT LD CIT(A) ERRED IN DELETING THE ADDITION MADE BY ASSESSING OFFICER ON ACCOUNT OF U NDISCLOSED INCOME FOUND DURING SURVEY FOR 50 LAKHS. 3. FACTS IN BRIEF ARE THAT ASSESSEE IN THE PRESENT CASE IS A PRIVATE LIMITED COMPANY AND ENGAGED IN RICE MILLING BUSINESS. THE ASSESSEE HAS FILED ITS RETURN INCOME ON 31.10.2007 FOR ASSESSMENT YEAR 2007-08 DECLARING TO TAL INCOME OF 3,35,615/-. THEREAFTER THE CASE WAS SELECTED FOR SCRUTINY ASSES SMENT. ACCORDINGLY NOTICES U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED UPON ASSES SEE. THERE WAS A SURVEY CONDUCTED IN ASSESSEES PREMISES ON 26.03.2007 UNDER SECTION 133A OF THE ACT. DURING THE COURSE SURVEY, A STATEM ENT OF ASSESSEE WAS RECORDED U/S. 133A(3)(I) OF THE ACT WHEREBY A VOLUNTARILY DISCLOS URE WAS MADE FOR AN INCOME OF 50 LAKHS. THE RELEVANT PORTION OF THE STATEMENT IS REPRODUCED BELOW:- Q.NO. 12. DO YOU WANT TO DISCLOSE ANY INCOME VOLU NTARILY? A. YES SIR, I WOULD LIKE TO DISCLOSE AN AMOUNT OF RS.5 0,00,0000/- (RUPEES FIFTY LAKHS) AND SIR, THIS DISCLOSED INCOME ALSO INCLUDES NOT INCOME FOR THIS PARTICULAR YEAR TILL NOW, SUNDRY CREDITORS (OUTSTAN DING LIABILITIES) AND OTHER DISALLOWANCES BEING THE PART OF TRADING AND P & L A /C Q.NO. 13. PLEASE EXPLAIN THE NATURE AND FIGURE OF DISCLOSED AMOUNT? ANS. SIR, AS ABOVE. Q.NO.14. DO YOU WANT TO CHANGE / ALTER / ADD ANYTH ING TO THE STATEMENT MADE BY YOU EARLIER? ANS. NO, I AM STANDING ON THE DEPOSITION MADE ABOVE . ITA NO.755/KOL/2011 A.Y.20 07-08 DCIT, CIR-2, MID. V. M/S GRAMI AGRO PVT. LTD. PAGE 3 Q. NO. 15. YOU HAVE ANY PROBLEM WITH THE VISITING OFFICIALS DURING THE COURSE OF SURVEY OPERATION AT YOUR BUSINESS PREMISES? ANS. NO, WE HAVE NOT FACED ANY PROBLEM. I OFFER THE STATEMENT IN SOUND AND GOOD MENTAL, HEA LTHY CONDITION WITHOUT ANY FEAR OR FORCE FROM INTERNAL OR EXTERNAL ENTITIES. FROM THE ABOVE STATEMENT THE AO OBSERVED THAT THE U NDISCLOSED INCOME PERTAINS TO THE INCORRECT AMOUNT OF SUNDRY CREDITORS SHOWN IN THE B OOKS OF ACCOUNTS AND VARIOUS INFLATED EXPENSES CLAIMED IN TRADING AND PROFIT & L OSS ACCOUNT. THE ASSESSEE HAS ALSO GIVEN A CHEQUE OF RS. 5 LACS TOWARDS THE PAYMENT OF ADVANCE TAX ALONG WITH THE VOLUNTARILY DISCLOSURE STATEMENT. BUT THE ASSESSEE DID NOT FILE ITS RETURN OF INCOME DISCLOSING THE AFORESAID AMOUNT OF RS. 50 LACS AS O FFERED TO TAX IN THE DISCLOSURE STATEMENT AT THE TIME OF SURVEY. HOWEVER THE ASSESSEE IN SUPPORT OF NON-INCLUSION OF THE AFORESAID AMOUNT IN ITS INCOME DID NOT PRODUCE ITS BOOKS OF ACCOUNT AND ALS O NOT PROVED THE GENUINENESS OF SUNDRY CREDITORS AND OTHER EXPENSES IN SPITE OF VAR IOUS OPPORTUNITIES PROVIDED TO IT. THE AO ALSO OBSERVED THAT ASSESSEE HAS WITHDRAWN TH E VOLUNTARY DISCLOSURE STATEMENT MADE U/S 133A OF THE ACT AFTER THE EXPIRY OF 2 YEAR S AND 9 MONTHS AND WHICH IS JUST 7 DAYS BEFORE THE TIME BARRING DATE FOR PASSING THE A SSESSMENT ORDER. IN THE ABSENCE OF NON SUBMISSION OF RELEVANT DOCUMENTS BY ASSESSEE, A O HAS CONFIRMED THE ADDITION OF 50 LACS AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT THE CORRECT INCOME WAS DISCLOSED AS PER AUDITED BOOKS OF ACCOUNTS. ALL THE BOOKS OF ACCOUNT WERE S UBMITTED BEFORE SURVEY TEAM DURING THE COURSE OF SURVEY AND CERTAIN BOOKS OF AC COUNTS AND DOCUMENTS WERE ALSO SEIZED BY THE SURVEY TEAM. THE ASSESSEE NEVER ADMIT TED THAT THE OUTSTANDING LIABILITIES TOWARDS SUNDRY CREDITORS ARE NOT CORRECT AND VARIOU S EXPENSES SHOWN IN ITS PROFIT AND LOSS AT INFLATED VALUE. THE ADVANCE TAX WAS PAID BY THE ASSESSEE FOR 5 LACS JUST TO BUY THE PEACE OF MIND AND ON THE VERBAL ASSURANCE OF TH E SURVEY TEAM THAT PAYMENT OF ADVANCE TAX WILL BE ADJUSTED WITH THE REGULAR INCOM E TO BE DECLARED IN ITS RETURNED INCOME FOR AY 2007-08. THE ADVANCE PAYMENT OF ADVAN CE TAX WAS NOT BASED ON ANY ITA NO.755/KOL/2011 A.Y.20 07-08 DCIT, CIR-2, MID. V. M/S GRAMI AGRO PVT. LTD. PAGE 4 ACCOUNTS. ALL THE STOCK REGISTERS SUPPORTED BY PURC HASE AND SALES REGISTERS ARE LYING IN THE CUSTODY OF AO AND NO FLAW HAS BEEN REPORTED BY THE AO ON THE IMPOUNDED DOCUMENTS. THE ALLEGED GROUND RAISED BY AO THAT ASS ESSEE HAS FAILED TO PRODUCE ITS BOOKS OF ACCOUNT IS FACTUALLY INCORRECT AS ITS BOOK S OF ACCOUNT ARE ALREADY UNDER THE CUSTODY OF AO. IT WAS ALSO SUBMITTED THAT THE DIREC TOR, SHRI BHABATOSH MANDAL, SENIOR CITIZEN OF AGED 69 YEARS, DURING THE SURVEY OPERATI ON, WAS NOT IN PROPER AND SOUND STATE OF MIND AS THERE WAS PROLONGED SURVEY OPERATI ON AND LONG INTERROGATION. HE WAS FORCED TO SIGN UNDISCLOSED INCOME AND ASSESSEE HAS BROUGHT THIS FACT TO THE NOTICE OF LD. JCIT, MIDNAPORE BY WRITING LETTER DATED 04.10.2 007. THE ADDITION OF RS. 50 LACS IS NOT SUPPORTED BY THE BOOKS OF ACCOUNTS AND OTHER RE LEVANT RECORDS. FROM THE ABOVE SUBMISSION AND OTHER RECORDS THE LD CIT(A) OBSERVED AS UNDER:- (A) VARIOUS BOOKS OF ACCOUNT WERE IMPOUNDED DURING THE COURSE OF SURVEY BESIDES THE INVENTORY OF CASH AND STOCK. , INCLUDIN G PURCHASE BOOK VIDE ALSO REGISTER RICE AND PADDY HANDLING REGISTER, DAILY MI LLING ACCOUNT AND OTHER MISCELLANEOUS PAPERS / BILLS / DEALING ORDERS ETC., BUT THE AO DID NOT RAISE IN A SINGLE QUESTION WITH REGARD TO THE BOOKS OF ACCOUNT IMPOUNDED DURING THE SURVEY; (B) FROM THE FACTS, IT WAS FOUND THAT DIRECTOR OF T HE ASSESSEE-COMPANY APPEARED BEFORE AO ON 23.12.2009 IN RESPONSE TO SHO W CAUSE NOTICE ISSUED BY AO AND EXPLAINED THAT DETAILS OF SUNDRY CREDITORS H AS ALREADY BEEN FILED; (C) THE ORDER-SHEET ENTRY ALSO REFLECTED THAT ASSES SEE APPEARED ON 09.04.2009 AND FIELD SOME DETAILS. THE DIRECTOR OF ASSESSEE-CO MPANY APPEARED ON 22.09.2009 AND HAS FILED WRITTEN STATEMENT IN RESPO NSE TO NOTICE ISSUED U/S 142(1) OF THE ACT. ACCORDINGLY, LD CIT(A) FINALLY OBSERVED THAT AO FA ILED TO FIND ANY INCRIMINATING MATERIALS TO JUSTIFY THE ADDITION OF 50 LAKH. THERE WAS NO BASIS FOR THE AO TO MAKE THE ADDITION OF 50 LAKH AS THERE WAS A SURVEY CONDUCTED IN THE BUS INESS PREMISES OF ASSESSEE JUST FIVE DAYS BEFORE END OF FINANCIAL YEA R AND ALL THE BOOKS OF ACCOUNT WERE IN THE CUSTODY OF AO. THE AO HAS FAILED TO MENTION ANY DISCREPANCY FROM THE DOCUMENTS IMPOUNDED AT THE TIME OF SURVEY. THE ALLE GATION OF AO IS SIMPLY THAT ASSESSEE HAS RETRACTED FROM THE DISCLOSURE STATEMEN T AFTER EXPIRY OF 2 YEARS AND 9 ITA NO.755/KOL/2011 A.Y.20 07-08 DCIT, CIR-2, MID. V. M/S GRAMI AGRO PVT. LTD. PAGE 5 MONTHS IS FACTUALLY INCORRECT. IT IS BECAUSE THE AS SESSEE ACTUALLY RETRACTED FROM THE DISCLOSURE STATEMENT MADE U/S. 133A OF THE ACT AT T HE TIME OF FILING OF ITS RETURN ON 30.10.2007. LD CIT(A) ACCORDINGLY DELETED THE ADDI TION MADE BY AO BY OBSERVING AS UNDER:- 4.7 THE RATIO OF THE ABOVE CASES IS SQUARELY APPLI CABLE IN THE CASE OF THE APPELLANT. A SURVEY ACTION U/S 133A OF THE ACT WAS CONDUCTED AT THE BUSINESS PREMISES OF THE APPELLANT AND NO DISCREPANCY OF CAS H ETC., WAS FOUND. HOWEVER, A STATEMENT OF THE MD WAS RECORDED WHERE HE VOLUNTA RILY DISCLOSED RS.50.00 LAKHS, TOWARDS NET INCOME FOR THE CURRENT YEAR AS W ELL AS SUNDRY CREDITORS AND OTHER EXPENSES INCLUDED IN TRADING AT P & L A/C. HE AD-WISE BIFURCATION OF DISCLOSURE WAS NOT SPECIFIED IN RELATION TO STATEME NT. SUBSEQUENTLY, THE APPELLANT FILED THE RETURN NOT ADMITTING THE DISCLO SURE. DURING THE ASSESSMENT PROCEEDINGS, THE APPELLANT EXPLAINED THAT HIS ALL A CCOUNTS INCLUDING SUNDRY CREDITORS AND EXPENSES DEBITED IN THE TRADING AND P & L A/C WERE CORRECT. HE FURTHER CONTENDED THAT THE DISCLOSURE WAS MADE UNDE R STRESS AND CHEQUE FOR ADVANCE TAX WAS GIVEN TO BUY PEACE OF MIND. THE DET AILS REQUISITIONED BY THE AO WERE FILED BY THE APPELLANT. THE AO WAS ALSO HAV ING THE BOOKS OF ACCOUNTS IN HIS POSSESSION WHICH WERE IMPOUNDED ON 26/03/200 7. HOWEVER, HE FAILED TO POINT OUT ABOUT ANY BOGUS SUNDRY CREDITORS AND INFL ATION OF EXPENSES DEBITED IN TRADING AND P & L A/C. WHEN NO INCRIMINATING DOCUME NTS, EXCESS STOCK ETC., FOUND, THE STATEMENT OF THE APPELLANT CANNOT BE MAD E THE SOLE BASIS FOR ADDITION. IN ORDER TO MAKE AN ADDITION ON THE BASIS OF SURRENDER DURING SEARCH OR SURVEY, IT IS SINE QUA NON THAT THERE SHOULD BE SOME OTHER MATERIAL TO CO- RELATE THE UNDISCLOSED INCOME WITH SUCH STATEMENT. IN VIEW OF THE FOREGOING AND KEEPING RELIANCE ON THE JUDICIAL PRONOUNCEMENTS AS ABOVE, THE ADDITION OF RS.50,00,000/- IS DELETED . BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REVENUE IS APPEAL BEFORE US. 5. BEFORE US LD DR SUBMITTED THAT ASSESSEE HAS MAD E DISCLOSURE FOR UNDISCLOSED INCOME OF 50 LAKHS. THE SAID DISCLOSURE WAS MADE BEFORE SURV EY TEAM WHEN THE DIRECTOR WAS FIT IN HIS MENTAL CONDITION. THE LD. DR DREW OUR ATTENTION TO THE STATEMENT MADE BY ASSESSEE U/S. 133A IN SUPPORT OF HIS CLAIM. THE LD. DR ALSO SUBMITTED THAT ASSESSEE HAS NOT PRODUCED ITS BOOKS OF ACCOUNT BEFORE THE AO TO VERIFY THE SUNDRY CREDITORS AND EXPENSES CLAIMED IN ITS PR OFIT AND LOSS A/C. LD DR FURTHER SUBMITTED THAT THE CLAIM OF ASSESSEE WAS NOT ACCEPT ABLE IN THE LIGHT OF THE DECISION IN THE CASE OF NAVDEEP DHINGRA V. CIT (2015) 56 TAXMAN N.COM 75 (P&H), 232 TAXMAN 425 WHERE IT WAS HELD AS UNDER : ONUS TO PROVE CONCEALMENT OF INCOME LIES UPON THE REVENUE. ADMISSIONS ARE AN INTEGRAL PART OF ASSESSMENTS AND AS THEY ARE THE BEST EVIDENCE OF A FACT, ITA NO.755/KOL/2011 A.Y.20 07-08 DCIT, CIR-2, MID. V. M/S GRAMI AGRO PVT. LTD. PAGE 6 WITHIN THE PERSONAL KNOWLEDGE OF AN ASSESSEE MAY IF THE ADMISSION IS VOLUNTARY AND NOT EXTRACTED BY COERCION OR FORCE, BE READ AGA INST AN ASSESSEE. THE RELEVANCE OF AN ADMISSION ADMITS TO ANOTHER EXCEPTI ON NAMELY IF THE ADMISSION IS RETRACTED WITHIN REASONABLE TIME AND BY ASSIGNIN G VALID REASONS. A PERUSAL OF THE IMPUGNED ORDERS REVEALS THAT THE ASSESSEE MA DE AN ADMISSION, ON 18.01.2006 AND FOLLOWED IT UP BY A WRITTEN ADMISSIO N ON 19.01.2006 BUT WHILE FILING HIS RETURN DID NOT RETRACT THE ADMISSION. AT NO STAGE OF THE SURVEY OR ASSESSMENT PROCEEDINGS EXCEPT AT ITS FAG END ON 4.1 2.2008 I.E. ALMOST TWO YEARS AFTER THE ADMISSIONS AND A FEW WEEKS BEFORE FINALIS ATION OF THE ASSESSMENT, DID THE ASSESSEE RAISE A PLEA THAT HE WAS COERCED AND F ORCED INTO MAKING ADMISSIONS. THE BELATED RETRACTING OF THE ADMISSION S ON 04.12.2008, NEARLY TWO YEARS AFTER THE ADMISSIONS AND THEN ALSO WITHOUT AN Y FACTS TO SUPPORT THE ALLEGATION OF COERCION OR PRESSURE, CANNOT ENURE TO THE BENEFIT OF THE ASSESSEE. AN ADMISSION IS SUBSTANTIAL EVIDENCE OF A FACT, WIT HIN THE SPECIAL KNOWLEDGE OF AN ASSESSEE AND IF NOT RETRACTED IMMEDIATELY OR WIT HIN REASONABLE TIME IS SUBSTANTIVE EVIDENCE OF A FACT AND MAY BE READ AGAI NST AN ASSESSEE. WE, THEREFORE, ANSWER THE ABOVE QUESTIONS AGAINST THE A SSESSEE AND AS WE FIND NO REASON TO HOLD THAT THE REVENUE HAS ERRED IN RELYIN G UPON ADMISSIONS MADE BY THE ASSESSEE, DISMISS THE APPEAL. ADMISSION WAS SUBSTANTIAL EVIDENCE OF FACT, WITHIN SPECIAL KNOWLEDGE OF ASSESSEE AND IF NOT RETRACTED IMMEDIATELY OR WITHIN REASONABLE TIME WAS SUBSTANTIVE EVIDENCE OF FACT AND MIGHT BE READ AGAI NST ASSESSEE SIMILARLY HONBLE HIGH COURT OF ALLAHABAD IN THE CA SE OF SANJEEV AGRAWAL VS. INCOME TAX SETTLEMENT COMMISSIONER 56 TAXMANN.COM 2 14(ALLAHABAD)/ 2015, 231 TAXMAN 71 HAS HELD AS UNDER : STATEMENT MAKE VOLUNTARY U/S.133A CANNOT BE RETRAC TED UNLESS ASSESSEE FILES EVIDENCE TO SHOW THAT ADMISSION MADE IN STATEMENT A T TIME OF SURVEY IS WRONG AND AGAINST MATERIAL ON RECORD. FINALLY, LD DR VEHEMENTLY RELIED ON THE ORDER OF A SSESSING OFFICER. ON THE OTHER HAND, LD. AR FILED A PAPER BOOK WHICH IS RUNNING PA GES FROM 1 TO 19 AND CITED VARIOUS CASE LAWS IN SUPPORT OF HIS CLAIM WHICH ARE KEPT ON RECORD. HE REITERATED THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COUR SE OF SURVEY WITH REGARD TO THE DISCLOSURE OF ITS UNDISCLOSED INCOME FOR 50 LAKH. THE STATEMENT WAS RECORDED UNDER COERCION AND PRESSURE BY THE SURVEY TEAM. SIMILARLY THE PAYMENT OF ADVANCE TAX OF 5 LAKH WAS MADE BY AO UNDER THE PRESSURE ONLY. THE ASSESSEE RETRACTED FROM THE STATEMENT DATED 25.04.2007 AND THE FINDING OF AO TH AT STATEMENT WAS RETRACTED AFTER 2 YEARS AND 9 MONTHS IS FACTUALLY INCORRECT. LD AR RE LIED ON THE ORDER OF LD. CIT(A). ITA NO.755/KOL/2011 A.Y.20 07-08 DCIT, CIR-2, MID. V. M/S GRAMI AGRO PVT. LTD. PAGE 7 6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FOREGOING DISCUSSION, WE FIND THAT ASSESSE E HAS MADE DISCLOSURE FOR UNDISCLOSED INCOME OF 50 LAKH AT THE TIME OF SURVEY BUT IT WAS RETRACTED AT THE TIME OF FILING ITS RETURN OF INCOME. HOWEVER, AO MADE SA ID ADDITION OF 50 LAKH ON THE BASIS OF DISCLOSURE STATEMENT UNDER SECTION 133A OF THE ACT AND ON THE GROUND THAT ASSESSEE FAILED TO PRODUCE ITS RELEVANT DOCUMENTS A LONG WITH BOOKS OF ACCOUNT. HOWEVER CONSIDERING FACTS AND CIRCUMSTANCES, LD. CI T(A) DELETED THE ADDITION BY HOLDING THAT AO FAILED TO BRING ANY INCRIMINATING M ATERIAL FROM THE BOOKS OF ACCOUNTS FOR MAKING SUCH ADDITION OF 50 LAKH IN SPITE OF THE FACT THAT AO WAS HAVING REQUISITES DOCUMENTS ALONG WITH ITS BOOKS OF ACCOUN T UNDER HIS CUSTODY WHICH WERE IMPOUNDED AT THE TIME OF SURVEY ON 26.03.2007. IT WAS ALSO OBSERVED THAT BOOKS WERE IMPOUNDED JUST 5 DAYS BEFORE THE END OF FINANCIAL Y EAR (08-09). NOW THE QUESTION BEFORE US ARISES FOR ADJUDICATION SO AS TO WHETHER THE ADDITION MADE BY THE AO ON ACCOUNT OF VOLUNTARY DISCLOSURE STATEMENT U/S 133A OF THE ACT BY THE ASSESSEE IS VALID IN THE EYES OF LAW. WE FIND THAT IN SEVERAL CASE LA WS IT HAS BEEN HELD THAT EVEN ASSESSEE HAS ADMITTED IN VOLUNTARILY DISCLOSURE FOR CERTAIN ADDITION BUT THE ASSESSING OFFICER IS DUTY BOUND TO BRING ON RECORD THE FACTUAL FACTS BEF ORE MAKING THE ADDITION. THE ADDITION SHOULD BE BASED ON MATERIALS AND BOOKS OF ACCOUNTS. IN THE CASE AT HAND, WE FIND THAT AO HAS FAILED TO BRING ANYTHING BASED ON FACTS FOR MAKING THE ADDITION OF 50 LAKH AND JUST RELIED ON VOLUNTARY DISCLOSURE STA TEMENT MADE BY ASSESSEE. IN FACT THE DECISION QUOTED THE AO IS IN FAVOUR OF THE ASSESSEE PULLANGODE RUBBER PRODUCE CO. LTD. VS. STATE OF KERALA & ANR. SUPREME COURT OF INDIA (1971) 39 CCH 0442 ISCC, (1973) 91 ITR 0018 IT IS NO DOUBT TRUE THAT ENTRIES IN THE ACCOUNT BOO KS OF THE ASSESSEE AMOUNT TO AN ADMISSION THAT THE AMOUNT IN QUESTION WAS LAID O UT OR EXPENDED FOR THE CULTIVATION, UPKEEP OR MAINTENANCE OF IMMATURE PLAN TS FROM WHICH NO AGRICULTURAL INCOME WAS DERIVED DURING THE PREVIOUS YEAR. AN ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE. IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT. ITA NO.755/KOL/2011 A.Y.20 07-08 DCIT, CIR-2, MID. V. M/S GRAMI AGRO PVT. LTD. PAGE 8 FROM THE ABOVE WE FIND THAT THE ADMISSION OF EVIDEN CE CANNOT BE CONCLUSIVE AND THE SAME CAN BE PROVED OTHERWISE. IN THIS CONNECTION, W E ARE RELYING IN THE CASE OF PAUL MATHEWS & SONS VS. COMMISSIONER OF INCOME TAX HIGH COURT OF KERALA (2003) 181 CTR 0207 : (2003) 263 ITR 0101 : (2003) 129 TAXMAN 0416 SEC. 133A(3)(III) ENABLES THE AUTHORITY TO RECORD T HE STATEMENT OF ANY PERSON WHICH MAY BE USEFUL FOR, OR RELEV ANT TO, ANY PROCEEDING UNDER THE ACT. SEC. 133A HOW EVER, ENABLES THE IT AUTHORITY ONLY TO RECORD ANY STATEME NT OF ANY PERSON WHICH MAY BE USEFUL, BUT DOES NOT AUTHORIZE FOR TAKING ANY SWORN IN STATEMENT. THE IT ACT, WHENEVER IT THOUGHT FIT AND NECESSARY TO CONFER SUCH POWER TO EXAMINE A PERSON ON OATH, THE SAME HAS BEEN EXPRESSLY PROVIDED WHEREAS S. 133A DO ES NOT EMPOWER ANY ITO TO EXAMINE ANY PERSON ON OATH. THUS, IN CONTRA DISTINC TION, TO THE POWER UNDER S. 133A, S. 132(4) ENABLES THE AUTHORISED OFFICER T O EXAMINE A PERSON ON OATH AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH EXAMINATI ON CAN ALSO BE USED IN EVIDENCE UNDER THE IT ACT. ON THE OTHER HAND, WHATEVER STATE MENT RECORDED UNDER S. 133A IS NOT GIVEN ANY EVIDENTIARY VALUE OBVIOUSLY FOR THE REASO N THAT THE OFFICER IS NOT AUTHORISED TO ADMINISTER OATH AND TO TAKE ANY SWORN STATEMENT WHICH ALONE HAS THE EVIDENTIARY VALUE AS CONTEMPLATED UNDER LAW. THEREFORE, THERE I S MUCH FORCE IN THE ARGUMENT OF THE COUNSEL FOR THE APPELLANT THAT THE STATEMENT, E LIC ITED DURING THE SURVEY OPERATION HAS NO EVIDENTIARY VALUE AND THE ITO WAS WELL AWARE OF THIS. THE ITO HAS REFERRED TO THE FACT THAT CONSEQUENT UP ON THE SURVEY, THE ASSESSEE HAS FILED A REVISED RETURN OFFERING 8 PER CENT OF THE C ONTRACT RECEIPT AS NET PROFIT BEFORE ALLOWING DEDUCTION OF SALARY PAYMENT MADE TO PARTNE RS AT RS. 1,60,050. IT WAS ALSO FOUND THAT THE 8 PER CENT PROFIT DISCLOSED IS DEEME D TO HAVE BEEN ARRIVED AFTER ALLOWING DEPRECIATION AND INTEREST ON CAPITAL PAID TO THE PARTNERS. THE ITO HAS NOT ACCEPTED THE INCOME DECLARED BY THE ASSESSEE IN A M ECHANICAL WAY, BUT APPLIED HIS MIND TO THE VARIOUS ASPECTS OF THE MATTER BEFORE CO MPLETING THE ASSESSMENT. THE ITO ALSO FOUND THAT DURING THE COURSE OF HEARING, CERTA IN DETAILS FILED SHOWED THAT THE A SSESSEE HAD RECEIVED AN ADVANCE OF RS. 19 LAKHS AND THE ADVANCES RECEIVED FROM P OF RS. 10 LAKHS HAS BEEN EXPLAINED. REGARDING THE ADVA NCE OF RS. 9 LAKHS RECEIVED FROM E ONLY THREE LAKHS IS FOUND TO BE GENUINE. HENCE, T HE BALANCE OF RS. 6 LAKHS IS TO BE EX PLAINED WHICH IS TELESCOPED IN THE INCOME ALREADY D ISCLOSED AT RS. 8,26,550. IT WAS IN SUCH CIRCUMSTANCES THAT NO SEPARATE ADDITION WAS MADE TO THE ACCOUNT. IT WAS ALSO FOUND BY THE ITO THAT ACCORDINGLY ON DISCUSSION, TH E TOTAL INCOME OF THE ASSESSEE FOR THE ASST. YR. 1998- 99 IS DETERMINED AT RS. 8,26,550. THUS, THE ITO CON SIDERED THE FACTUAL ASPECTS OF THE MATTER REGARDING THE ADVANCE CLAIMED TO HAVE BEEN RECEIVED AND THE BALANCE OF RS. 6 LAKHS OUT OF THE 19 LAKHS WAS ALSO TELESCOPED IN THE INCOME ALREADY DISCLOSED. IN THE STATEMENT IN THE COURSE OF SURVEY , THE MANAGING PARTNER ONLY STATED THAT AN AMOUNT OF RS. 19 LAKHS WAS INTRODUCE D TOWARDS ADVANCE FOR SALE OF LAND AND E CONFIRMED ONLY SIX LAKHS. IT WAS ON THIS BASI S THAT THE BALANCE OF RS. 13 LAKHS WERE OFFERED FOR THE ASST. YR. 1998- 99. THAT WAS CONFIRMED BY P AND E AS RS. 6 LAKHS WAS FOUND TO BE A MISTAKE AND THE ASSESSMENT ORDERS IN THEIR CASE WERE ALSO PRODUCED. THE ITO ALSO VERIFIED THE ABOVE ASPECTS. THEREFORE, THE ASSUMPTION THAT WHAT WAS ITA NO.755/KOL/2011 A.Y.20 07-08 DCIT, CIR-2, MID. V. M/S GRAMI AGRO PVT. LTD. PAGE 9 OFFERED I N THE STATEMENT OF 43 LAKHS IS IN ADDITION TO WHAT HAS BEEN ASSESSED AND ON THE BASIS THAT THE STATEMENT HAS GOT EVIDENTIARY VA LUE IS ERRONEOUS. THE MATERIALS COLLECTED DURING THE COURSE OF SURVEY HAS BEEN BORN E IN MIND BY THE AO WHO WAS WELL AWARE OF THE EVIDENTIARY VALUE OF THE STATEMENT. AT THE SAME TIM E, SUCH SURVEY CONDUCTED UNEARTHED CERTAIN INCOME AND THE ITO RIGH TLY, ON THE BASIS OF THE ACCOUNTS AND OFFER MADE AND THE ADMISSIONS MADE BEFORE HIM, CAME TO THE CONCLUSION THAT WHAT WAS OFFERED IN THE WR ITTEN OFFER MADE BY THE ASSESSEE IS REASONABLE. THE ALLEGED ADMISSION CONTAINED IN THE ANSWER TO QUESTION NO. 1 3 IN THE STATEMENT OF THE MANAGING PARTNER OF THE ASSESSEE OBTAINED UNDER S. 133A IS ONLY A QUALIFIED ONE AND THE ASSESSEE HAD CLEARLY EXPLAINED THE SAME BEFORE THE AO BY COGENT MATERIALS AND THE SAME WAS ACCEPTED BY THE SAID OFFICER. THE VIEW TAKEN BY THE ITO CANNOT BE SAID TO BE UNSUSTAINABLE IN LAW SO AS TO CALL IT AN ORDER P ASSED ERRONEOUSLY. THE ENTIRE SUM OF RS. 19 LAKHS WAS CONSIDERED FOR TH E BLOCK ASSESSMENT COMPLETED AS EARLY AS ON 28TH OCT., 1999, IN THE CASE OF P MUCH BEFORE THE SURVEY . IN THESE CIRCUMSTANCES, THE STATEMENT OF THE ASSESSEE THAT THE AMOUNT OF RS. 13 LAKHS OFFERED BY HIM IN THE STATEMENT DURING THE COURSE OF SURVEY IS ONLY A MISTAKE OF FACT CANNOT BE BRUSHED ASIDE. FURTHER, IN THE LIGHT OF THE VOLUNTARY DISCL OSURE IN THE LETTER GIVEN IN WRITING BY THE ASSESSEE THE FACTS GIVEN BY HIM HAVE BEEN VERIF IED WITH THE BOOKS OF ACCOUNTS AND IT WAS ONLY AFTER CONSIDERATION OF THE VARI OUS ASPECTS OF THE MATTER AND RELATED FACTS THAT THE AO ACCEPTED THE OFFER MADE BY THE ASSESSEE . IN SUCH CIRCUMSTANCES, THE VIEW TAKEN BY THE ITO CANNOT BE SAID TO BE PREJUDICIAL T O THE REVENUE NOR CAN IT BE SAID TO BE ERRONEOUS. THERE IS NOTHING IN THE OR DER OF THE ITO TO WARRANT A FINDING THAT IT IS UNSUSTAINABLE IN LAW. FOR THE ABOVE REASONS, THE CI T WAS NOT JUSTIFIED IN LAW IN INVOKING THE POWERS UNDER S. 263 AS THE TWIN CONDIT IONS PRECEDENT TO EXERCISE THE POWER HAS NOT BEEN SATISFIED IN THIS CASE. MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 159 CTR (SC) 1 : (2001) 243 ITR 83 (SC) AND SMT. TA RA DEVI AGGARWAL VS. CIT 1973 CTR (SC) 107 : (1973) 88 ITR 323 (SC) RELIED ON. ITO HAVING NOT ACCEPTED THE INCOME DECLARED BY THE ASSESSEE AFTER THE SURVEY IN A MECHANICAL WAY, BUT AFTER APPLYING HIS MIND TO VARI OUS ASPECTS OF THE MATTER INCLUDING THE DISCLOSURE MADE BEFORE COMPLETING THE ASSESSMEN T, ORDER PASSED BY THE AO CANNOT BE SAID TO BE ERRONEOUS OR PREJUDICIAL TO THE REVEN UE AND THE CIT WAS NOT JUSTIFIED IN INVOKING POWERS UNDER S. 263. IN VIEW OF THE ABOVE PRECEDENTS, WE FIND THAT FOR M AKING SUCH ADDITION ON THE BASIS OF VOLUNTARILY DISCLOSURE STATEMENT, IT WAS EQUALLY IM PORTANT FOR THE AO TO BRING THE SUBSTANCE FOR MAKING SUCH ADDITION TO THE TOTAL INC OME OF ASSESSEE. THE CASE LAW CITED BY LD DR IS DISTINGUISHABLE FROM THE FACTS IN HAND. FROM THE CASE OF NAVDEEP DHINGRA V. CIT (2015) 56 TAXMANN.COM 75 (P&H), 232 TAXMAN 425 SUPRA, WE FIND IN THIS CASE THE ASSESSEE DID NOT RETRACT FROM THE STA TEMENT AT THE TIME OF FILING OF RETURNS BUT RETRACTED AT THE FAG-END OF THE ASSESSMENT PROC EEDINGS. IN THE INSTANT CASE THE ITA NO.755/KOL/2011 A.Y.20 07-08 DCIT, CIR-2, MID. V. M/S GRAMI AGRO PVT. LTD. PAGE 10 ASSESSEE RETRACTED AT THE TIME OF FILING OF RETURNS . SIMILARLY FROM THE FACTS OF THE CASE SANJEEV AGRAWAL VS. INCOME TAX SETTLEMENT COMM ISSIONER 56 TAXMANN.COM 214(ALLAHABAD)/ 2015, 231 TAXMAN 71 (SU PRA) WE FIND THAT THE RETRACTION FROM STATEMENT HAS BEEN ALLOWED IF BASED ON COGENT REASONS. IN THE INSTANT CASE, ACCORDINGLY WE FIND THAT THE ONUS WAS THERE ON THE DEPARTMENT TO SUBSTANTIATE THE DISCLOSURE STATEMENT GIVEN BY T HE ASSESSEE ON THE BASIS OF BOOKS OF ACCOUNTS AND DOCUMENTS IMPOUNDED DURING TH E SURVEY. HOWEVER, IN THE INSTANT CASE, ASSESSEE HAS GIVEN AL L THE DETAILS AS REQUIRED BY AO BUT HE FAILED TO BRING ANY DEFECTS IN THE DOCUMENTS AND BOOKS OF ACCOUNT AS SUBMITTED BY ASSESSEE. WE ALSO FIND THAT CBDT HAS ISSUED A CLARI FICATION NO. F NO.286/2/2003- IT(INV) DATED 10.03.2003, WHERE IT IS HELD:- THEREFORE, ADVISED THAT THERE SHOULD BE FOCUS AND CONCENTRATION ON COLLECTION OF EVIDENCE OF INCOME WHICH LEADS TO INFORMATION ON WHAT HAS NOT BEEN DISCLOSED OR IS NOT LIKELY TO BE DISCLOSED BEFORE T HE INCOME TAX DEPARTMENTS. SIMILARLY, WHILE RECORDING STATEMENT DURING THE COU RSE OF SEARCH IT SEIZURES AND SURVEY OPERATIONS NO ATTEMPT SHOULD BE MADE TO OBTA IN CONFESSION AS TO THE UNDISCLOSED INCOME. ANY ACTION ON THE CONTRARY SHAL L BE VIEWED ADVERSELY. IN VIEW OF THE ABOVE, WE FIND NO REASON TO INTERFER E IN THE ORDER OF LD. CIT(A) AND WE UPHOLD THE SAME. 7. NEXT ISSUE RAISED BY REVENUE IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY AO FOR 9,87,919/- ON ACCOUNT OF NON DEDUCTION OF TAX DEDU CTED AT SOURCE (TDS FOR SHORT) U/S 40(A)(IA) OF THE ACT. 8. DURING THE YEAR, ASSESSEE HAS CLAIMED CERTAIN EX PENSES WHICH ARE LISTED BELOW:- PARTICULARS AMOUNT ( ) CARRIAGE INWARD 2,60,030/- CARRIAGE OUTWARD 93,493/- LOADING AND UNLOADING CHARGES 3,46,396/ - ACCOUNTING CHARGES 18,000/- REMUNERATION OF DIRECTOR 2,7 9,000/- 9,87,919/- ITA NO.755/KOL/2011 A.Y.20 07-08 DCIT, CIR-2, MID. V. M/S GRAMI AGRO PVT. LTD. PAGE 11 THE ASSESSEE FAILED TO PROVIDE DOCUMENTARY EVIDENCE IN SUPPORT OF ABOVE EXPENSES, THEREFORE, AO DISALLOWED THE SAME BY HOLDING THAT T DS HAS NOT BEEN DEDUCTED BY ASSESSEE AND HE ADDED BACK TO THE TOTAL INCOME OF A SSESSEE. 9. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A), WHERE ASSESSEE SUBMITTED THAT ALL THE BOOKS OF ACCOUNT WERE IMPOUN DED AT THE TIME OF SURVEY AND WHICH ARE STILL LYING IN THE CUSTODY OF SURVEY TEAM . BUT AO FAILED TO CONSIDER THE BOOKS OF ACCOUNT AND INVOKED THE PROVISION OF SEC. 40(A)(IA) OF THE ACT WITHOUT ANY BASIS THAT ASSESSEE HAS NOT VIOLATED ANY PROVISION OF SEC. 194C OF THE ACT. ACCORDINGLY, LD CIT(A) HAS DELETED THE ADDITION MAD E BY AO BY OBSERVING AS UNDER:- 5.2 I HAVE DULY CONSIDERED THE SUBMISSION OF THE A RS OF THE APPELLANT AND INCLINED TO ACCEPT THEIR VERSION. FROM THE DETAILS FILED, I FIND THAT EACH PAYMENT UNDER ALL THE ABOVE HEADS WERE MUCH BELOW THE PRESC RIBED LIMIT SO AS TO ATTRACT THE MISCHIEF OF SECTION 194C OF THE ACT. THESE DETA ILS WERE REQUISITIONED DURING THE ASSESSMENT PROCEEDINGS AND SAMPLE COPIES OF THE SAME RE FOUND AVAILABLE ON ASSESSING OFFICER'S RECORD. THUS, IT CANNOT BE S AID THAT THE AO WAS NOT AWARE OF THE QUANTUM OF EACH PAYMENT UNDER THE HEAD S OF CARRIAGE INWARD AND OUTWARD, LOADING AND UNLOADING CHARGES AND ACCOUNTI NG CHARGES. HE EVE DISALLOWED PAYMENTS FOR REMUNERATION TO DIRECTOR U/ S. 40(A)(IA), THOUGH TDS IS NOT APPLICABLE ON SUCH PAYMENTS THE ADDITIONS SO MA DE RE ENTIRELY ARBITRARY, WHIMSICAL AND DEVOID OF REASONING. IN VIEW OF SUCH, ENTIRE ADDITION OF RS.9,87,919/- IS DELETED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REVENUE IS IN APPEAL BEFORE US. 10. BEFORE US LD DR SUBMITTED THAT EXPENSE CLAIMED BY ASSESSEE ARE EXCEEDING LIMIT AS SPECIFIED U/S. 194C OF THE ACT AND HE VEHE MENTLY RELIED ON THE ORDER OF AO. ON THE OTHER HAND, LD. SUBMITTED ALL DETAILS OF EXP ENSES WERE AVAILABLE BEFORE AO THOUGH WITHOUT CONSIDERING THE SAME HE INVOKED THE PROVISION OF SEC. 40(A)(IA) AND HE RELIED ON THE ORDER OF LD. CIT(A). 11. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET, WE FIND THAT AO HAS MADE THE ADDITIO N WITHOUT BRINING ANY DEFECT IN ASSESSEES BOOKS OF ACCOUNT. BEFORE US LD. AR HAS B ROUGHT THE COPY OF LEDGER COPY OF ALL THE EXPENSES FROM WHICH WE FIND THAT IN NONE OF THE CASE, THE EXPENSE EXCEEDS THE LIMIT AS SPECIFIED U/S 194C OF THE ACT. WE ALSO FIN D THAT LD. DR HAS FAILED TO BRING ITA NO.755/KOL/2011 A.Y.20 07-08 DCIT, CIR-2, MID. V. M/S GRAMI AGRO PVT. LTD. PAGE 12 ANYTHING CONTRARY TO THE FINDINGS OF LD. CIT(A). WE ARE INCLINED TO INTERFERENCE IN THE ORDER OF LD. CIT(A). THIS GROUND OF REVENUES APPEA L IS DISMISSED. 12. LAST GROUND OF REVENUES APPEAL IS GENERAL IN N ATURE AND DOES NOT REQUIRE ANY ADJUDICATION. 13. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 22/07/2016 SD/- SD/- (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP ! - 22/07/2016 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-DCIT, CIRCLE-2, MIDNAPORE, SAHOO BHAWAN, KSHUDIRAM NAGAR P.O. MID NAPORE, DIST. PASCHIM MEDINIPUR 2. /RESPONDENT-M/S GRAMI AGRO PVT. LTD. JAMDA, JHARGRA M, DIST.PASCHIM MEDINIPUR, PIN. 721 507 3. '# % / CONCERNED CIT 4. % - / CIT (A) 5. &'( ))'# , '# / DR, ITAT, KOLKATA 6. (*+ / GUARD FILE. BY ORD ER/ , /TRUE COPY/ / '#,