Uday Chhasia, Surat V. Deputy Commissioner of Income-tax, Circle -1(3), Surat

ITA 799/SRT/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8073 (ITAT-SURAT)
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 13-03-2024
• Assessment Year: 2015-2016
• Appeal Filed On: 22-11-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVIKANT GUPTA
• Assessee Lawyers: ISSUING MORE NOTICES OF
• Keywords: Income from undisclosed sources; Search and seizure; Opportunity of being heard; Deemed to accrue or arise in india; Tangible material; Corroborative evidences; TDS; Set aside
• Section: 131; 68; 148; 144; 15; 139; 143(3); 142(1); 133A; 40(a)(ia); 143(2); 139(1); 139(4); 101

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर अपील सं./ITA Nos.798 to 800/SRT/2023 Assessment Years: (2015-16) (Physical Hearing) Uday Chhasia, B-503, Regency High-Rise, Dumas Road, Piplod, Surat – 395005 Vs. The ACIT, Circle – 2(3), Surat èथायीलेखासं./जीआइआरसं./PAN/GIR No.: ACZPC1337M (Appellant) (Respondent) आयकर अपील सं./ITA Nos.809 & 810/SRT/2023 Assessment Years: (2014-15 & 2017-18) (Physical Hearing) Uday Chhasia, B-503, Regency High-Rise, Dumas Road, Piplod, Surat – 395005 Vs. The ACIT, Circle – 2(3), Surat èथायीलेखासं./जीआइआरसं./PAN/GIR No.: ACZPC1337M (Appellant) (Respondent) Appellant by Shri Mehul Shah, CA Respondent by Shri Ravi Kant Gupta, CIT(DR) and Vinod Kumar, Sr. DR Date of Hearing 14/03/2024 Date of Pronouncement 28/03/2024 आदेश / O R D E R PER A. L. SAINI, AM: Captioned five appeals filed by the assessee, pertaining to different Assessment Years (AYs) 2014-15, 2015-16 and 2017-18, are directed against the separate orders passed by the Learned Commissioner of Income Tax (Appeals)-4, [in short “the ld. CIT(A)”], Surat, dated 20.10.2023, 26.09.2023 and 29.09.2023 respectively, 2 798 – 800, 809 & 810/SRT/2023/AY.2015-16, 2014-15 & 2017-18 Uday Chhasia which in turn arise out of separate assessment orders/penalty orders passed by the Assessing Officer under sections 143(3)/254, 271F, 144, 271(1)(b) and 147/144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). 2. Since, these appeals filed by the same assessee for different assessment years and different issues are involved, therefore, all these appeals have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. 3. Brief particulars of all the appeals filed by the assessee and the issue involved in these appeals are mentioned below: (i) ITA No.809/SRT/2023 for AY.2014-15: In this case, assessment order was passed by the Assessing Officer under section 143(3) r.w.s. 254 of the Act. During the assessment proceedings, the assessee submitted details before the Assessing Officer and assessment was framed u/s 143(3) of the Act. Second inning has already been given by the Tribunal. (ii) ITA No.798/SRT/2023 for AY. 2015-16:In this case, assessment order was passed by the Assessing Officer under section 271F of the Act, imposing penalty on the assessee of Rs.5,000/-, as the assessee did not file the return of income as per due date prescribed under section 139(1) of the Act. (iii) ITA No.799/SRT/2023 for AY.2015-16: In this case, assessment order was framed by the Assessing Officer under section 144 of the Act, as the assessee did not file the required details and documents before the Assessing Officer. On appeal, the ld. CIT(A) passed the ex-parte order on merit based on the material available on record. 3 798 – 800, 809 & 810/SRT/2023/AY.2015-16, 2014-15 & 2017-18 Uday Chhasia (iv) ITA No.800/SRT/2023 for AY.2015-16: In this case, Assessing Officer imposed penalty under section 271(1)(b) of the Act of Rs.20,000/- on account of non-compliance of notices by the assessee on dated 18.09.2017 and 09.10.2017. On appeal, the ld. CIT(A) passed ex-parte order and confirmed the penalty imposed by the assessing officer. (v) ITA No.810/SRT/2023 for AY.2017-18: In this case, Assessing Officer framed the assessment under section 144 of the Act. The assessee has not filed return of income under section 139(1) of the Act. The assessee also has not filed the return of income in response to notice under section 148 of the Act. On appeal, the ld. CIT(A) decided the appeal, ex-parte based on the material available on record. 4. Now, we shall take assessee’s appeal in ITA No.809/SRT/2023, wherein the grounds of appeal raised by the assessee are as follows: “1. On the facts and in circumstances of the case as well as law on the subject, the learned CIT(A) has erred in passing ex-parte order without giving reasonable and sufficient opportunity of being heard. 2. On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(A) has erred confirming the action of assessing officer in making the addition of Rs. 6,47,417/- returned as business loss to the total income of the assessee. 3. On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(A) has erred in confirming the action of assessing officer in making the addition of Rs. 2,50,00,000/- as deemed income u/s. 68 of the I.T. Act, 1961. 4. It is therefore prayed that above addition made by the assessing officer and confirmed by CIT(A) may please be deleted. 5. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.” 5. First, we shall take ground nos.2 and 3, raised by the assessee which relate to addition of Rs.6,47,417/-, as business loss and addition 4 798 – 800, 809 & 810/SRT/2023/AY.2015-16, 2014-15 & 2017-18 Uday Chhasia of Rs.2,50,00,000/-, (pertains to survey proceedings), as deemed income under section 68 of the Act. 6. The relevant material facts, as culled out from the material on record, are as follows. The assessee has filed his Return of income for A.Y.2014-15 belatedly on 29.03.2016 and declaring current year loss of Rs.6,47,417/-. The assessee`s case was selected for scrutiny and notice u/s 143(2) of the I.T. Act dated 19.09.2016 was issued and served upon the assessee. A survey action u/s 133A of the I.T. Act was carried out on 05.03.2014, at the premises of M/s Oum Build Infra which is the proprietor ship concern of the assessee at Vimal Hexagon, P.P. No. 107, T.P. 32, Near Parshurarn Garden, Near C. M. Residency, Honey Park Road, Adajan, Surat. At the time of the survey proceedings, the assessee, Shri Uday Chhasia who was the main partner of the firm and had the key of the office premises. Initially, the assessee did not present himself at the survey premises. After initial conversation on his mobile phone with the survey team he was not reachable on the phone either. Thereafter, a Summons under section 131 of the I.T. Act was also served through affixture at the residential premise during the course of the survey. Thereafter, arrest warrant was got issued in the assessee’s name and he was tracked down by the police and was forced to attend the survey proceedings. 7. During the course of survey action u/s 133A of the I.T. Act, 1961, the statement of the assessee was recorded u/s 131 (1A) of the I.T. Act, 1961 on oath on 05.03.2014. In the statement recorded, Shri Uday Chhasia stated in his answer to question No. 3, that, initially the assessee along with the other partner had started the Projects Vimalnath Residency, Vimalnath View and Vimal Hexagon in the 5 798 – 800, 809 & 810/SRT/2023/AY.2015-16, 2014-15 & 2017-18 Uday Chhasia partnership firm M/s Oum Build Infra. One of these projects viz: Vimal Hexagon was later on converted into the proprietorship concern of Shri Uday Chhasia as another partner Shri Manjibhai Lathia resigned from the partnership firm due to ill-health. Further, the assessee has disclosed unaccounted income of Rs.2.5 Crore as his unaccounted income on account of “on money received/receivable” at answer to Question No. 11 of the statement recorded on 05.03.2014. The relevant portion of the statement is reproduced below: “Q. 11: It is very common practice in your trade to pay and receive on- money. What do you want to say in respect of all the three above stated projects? “Ans.: Yes, you are right that in our trade the practice of receiving and giving ‘on-money’ is very common and I am also part of the system. Therefore, I want to state that I have received/receivable around Rs 50 Lakh in the project named - Vimalnath Residency, around 60 Lakhs in the project named Vimalnath View and around Rs 1 Crore 40 Lakhs in the project named Vimal Hexagon. In short, the on-money received/receivable in all the above stated three project is around Rs 2 Crore 50 Lakhs which I want to declare the aforesaid amount of Rs 2.50 Crore as my undisclosed income from the aforesaid three projects. Further, I want to clarify that the aforesaid disclosed income of Rs 2.50 Crore is over and above my regular income from these projects.” 8. The assessing officer noted that as per facts in the copies of Income Tax return (ITR) and financial statements of the assessee, the assessee is engaged in the business of construction and development of real estate and had sales during the year of Rs.1.44 Crores. The various expenses as shown in the Profit and Loss account have been claimed. The net loss in the Profit and Loss account has been shown as Rs.21,26,659/-. 9. The assessing officer also noted that against the original order of the assessing officer, wherein, the AO made addition of Rs.2,50,00,000/- on account of survey statement, the assessee had preferred appeal before the Ld. CIT(A)-2, Surat against the order 6 798 – 800, 809 & 810/SRT/2023/AY.2015-16, 2014-15 & 2017-18 Uday Chhasia passed by A.O. on 30.12.2016 and the Ld. CIT(A)-2, Surat has confirmed the addition vide order dated: 04.07.2018. Thereafter, assessee had preferred appeal before Hon'ble ITAT, Surat Bench, Surat. The Hon'ble ITAT Bench, Surat, vide its order in ITA No. 108/SRT/2019, dated: 13.12.2019 directed to provide one more opportunity to consider all the points raised by the assessee, therefore order of CIT(A) was set aside and the case was remitted back to the file of the assessing officer for fresh adjudication. 10. Therefore, in pursuance of the order of the Tribunal in ITA No. 108/SRT/2019, dated: 13.12.2019 (supra), wherein the Tribunal has given second inning to the assessee, hence, the assessing officer issued notice u/s 142(1) r.w.s. 129 of the Act to the assessee on 26.02.2021 requesting him to reply to the notices u/s 142(1) of the Act, in respect of the addition of Rs.2,50,00,000/-. 11. In response to the notices of the Assessing Officer, the assessee submitted his reply before the Assessing Officer, which is reproduced below: “In response to the notices u/s 142 issued, the AR of the assessee, Shri Mehul Shah has submitted a reply vide letter dated 02.03.2021. The reply of the assessee is reproduced below for the sake of clarity: “1. With regard to the above subject and reference, it is submitted that the assessee maintains that there are no incriminating material found during the course of Survey u/s 133A in support of the addition made by the AO of Rs.2,50,00,000/-. 2. By not offering Rs.2,50,00,000/- in the Return of Income, the assessee has in a way retracted his statement and it is well settled law that the statement taken under Survey has no evidential value without any corroborative evidence. 3. It is well settled law that no addition can be made on the basis of statement recorded at the time of survey. The reliance is placed on the decision of the following cases: 7 798 – 800, 809 & 810/SRT/2023/AY.2015-16, 2014-15 & 2017-18 Uday Chhasia 1. Paul Mathews & Sons v. CIT-263 ITR 101(Ker)(HC) 2. CIT v. S. Khader Khan Son - 300 ITR 157 (Mad)(HC) 4. The assessee vide letter dated 05.07.2018 had requested the AO to provide the copy of statement of the assessee recorded during the survey proceeding and other incrimination material on record on the basis of which addition of Rs.2,50,00,000/- on account of undisclosed income is made.” 12. However, the assessing officer rejected the contention of the assessee and held that the disclosure was made by the assessee on the basis of documents impounded during the course of survey proceedings, therefore AO made addition of Rs.2,50,00,000/- u/s 68 of the Act. 13. In the second inning the assessing officer also made a fresh addition of Rs.10,78,23,000/- on account of violation of provision of section 40(a)(ia) of the Act. 14. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A). Before, ld CIT(A), the assessee did not appear therefore, ld CIT(A) passed the ex parte order, on merit, based on the statements of facts submitted by the assessee. The ld CIT(A) deleted the fresh addition of Rs.10,78,23,000/- made by the assessing officer, on account of violation of provision of section 40(a)(ia) of the Act. The said addition was deleted by ld CIT(A) suo-moto, based on the statement of facts submitted by the assessee observing as follows: “6. Decision 6.1 After going through the assessment order and other material available on record, I proceed to dispose the present appeal as under: 6.2 In Ground No.1, the appellant has challenged the addition of Rs.10,78,23,000/- on account of violation of provision of section 40(a)(ia) of the Act. During the course of assessment proceedings, the AO noted that the documents in respect of purchase of immovable property for consideration of Rs.10,78,23,000/- were found during the course of Survey. 8 798 – 800, 809 & 810/SRT/2023/AY.2015-16, 2014-15 & 2017-18 Uday Chhasia It was revealed that the IDS @ 1% i.e. Rs.10,78,230/- was deducted by the appellant but the same was not deposited into the Govt. account. The appellant did not furnish any details in spite of specific query raised by the AO during the course of assessment proceedings. During the assessment proceedings, the appellant has contended that no expenditure in respect of purchase of immovable property has been claimed as deduction and therefore, the question of disallowance u/s 40(a)(ia) of the Act does not arise. On considering overall facts of the case, I find that the AO has invoked provision of Section 40(a)(ia) of the Act for default in depositing IDS deducted u/s 194IA of the Act on consideration paid towards purchase of immovable property. The provisions of Section 40(a)(ia) of the Act applicable for the year under consideration reads as under: “...any interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resident or amounts payable to a contractor or sub-contractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XV/I-B and such tax has not been deducted or, after deduction, has not been paid on or before the due date specified in sub-section (1) of section 139...”: 6.3 On plain reading of the above section, it is evident that the TDS provision u/s 194IA of the Act is not covered u/s 40(a)(ia) of the Act. The provision of Section 40(a)(ia) specifies the disallowance of certain expenses claimed while computing income chargeable under the Head ‘profit and gain of business or profession’ in case of violation of applicable TDS provisions. It is apparent that the purchase of immovable property does not get covered in the above provisions of Section 40(a)(ia) of the Act. The default in deposit of TDS deducted u/s 194IA of the Act attracts other penal provisions provided in the Act. Therefore, it is apparent that the disallowance u/s 40(a)(ia) of the Act made by the AO in respect of failure to deposit TDS u/s 194IA of the Act is not accordance with the provisions of the Act. 6.4 In view of the above discussion, the addition of Rs.10,78,23,000/- u/s 40(a)(ia) of the Act is not justified and the AO directed to delete the same. Ground No.1 is allowed. 15. However, the ld CIT(A) confirmed two additions, namely, Rs.6,47,417/- in respect business loss and Rs.2,50,00,000/- in respect of addition made on account of survey statement, observing as follows: “7. In Ground No.2, the appellant has challenged the addition of Rs.6,47,417/- returned as business loss by the appellant. This addition was made in the original assessment order and the AO has considered the same amount while computing the set aside assessment under consideration. The appellant did not file any submission on this issue before the AO in spite of specific directions by the Hon'ble ITAT giving opportunity to the appellant 9 798 – 800, 809 & 810/SRT/2023/AY.2015-16, 2014-15 & 2017-18 Uday Chhasia to explain his case before the AO. However, the appellant refused to furnish any details before the AO. It is seen that during the course of Appellate Proceedings also, the appellant failed to furnish any submission on this issue. Even in the Form 35 filed by the Appellant, there is neither any mention of any supporting documents nor any submission in support of ground of appeal raised by the appellant. As the appellant has failed to file any submission, it is presumed that the appellant does not wish to bring any material on record in support of claim made against the addition made by the AO. Under the circumstances, I do not find any reason to interfere with the findings of the AO. Accordingly, this ground of appeal is dismissed. 8. In Ground No.3, the appellant has challenged the addition of Rs.2,50,00,000/- made by the AO u/s 68 of the Act, while finalizing the assessment in pursuance to order of Hon'ble ITAT, Surat Bench setting aside the original assessment order. During the course of assessment proceedings, the AO noted that the appellant had disclosed, during Survey action, unaccounted income of Rs.2,50,00,000/- on account of on-money received / receivable. However, the same was not shown in the income tax return filed by the appellant. The appellant submitted that this addition was not based on any incriminating material and by not offering Rs.2,50,00,000/- in the ROI, it should be presumed that the statement disclosing additional income during the Survey proceeding has been retracted. The AO did not agree with the above contention of the appellant and held that the additional income was disclosed by the appellant on account of on-money received / receivable from 3 projects undertaken by him. During the course of Appellate Proceedings, the appellant has not filed any submission on this issue. On perusal of material available on record, I find that the appellant had admitted that he has taken on-money in his business of real estate and the specific disclosure was made in respect of each of the 3 projects undertaken by the appellant. The appellant failed to bring on record any valid-reason for not disclosing the admitted additional income in his ROI. It is apparent that the additional income was admitted during the course of Survey action conducted at the business premise of the appellant. There is nothing on record which suggests that the said admission was made under any coercion or force. This income was offered over and above the regular income from the real estate projects undertaken by the appellant, the appellant was duty bound to offer the same in his ROI after paying applicable taxes thereon. Considering overall facts of the case, I am of the opinion, that the AO was justified in making addition of Rs.2,50,00,000/- as the appellant failed to disclose the admitted additional income in his ITR without any valid reason. In view of the above, the addition of Rs.2,50,00,000/- made by the AO is upheld. Hence, Ground No.3 is dismissed. 9. In Ground No.4. the appellant has challenged the action of the AO enhancing addition by Rs.10,78,23,000/-, although the Hon'ble ITAT had set aside the matter to the file of the AO on the issues relating to addition of Rs.2,50,00,000/- and disallowance of loss of Rs.6,47,417/-. The issue of 10 798 – 800, 809 & 810/SRT/2023/AY.2015-16, 2014-15 & 2017-18 Uday Chhasia addition of Rs.10,78,23,000/- has already been dealt with in Ground No.1 above and the relief has been granted to the appellant. Under the circumstances, this ground of appeal becomes infructuous and requires no further adjudication.” 16. Aggrieved by the order of ld CIT(A), the assessee is in further appeal before us. 17. Learned Counsel for the assessee, argued that during the survey proceedings no any incriminating material or tangible material was found by survey team in respect of addition to the tune of Rs.2,50,00,000/- under section 68 of the Act. The said addition was made by the assessing officer based on the statement of the assessee taken during the survey proceedings. During the second inning, assessment proceedings, u/s 143(3) r.w.s. 254 of the Act, the assessee had submitted before the assessing officer that assessee has not offered Rs.2,50,00,000/- in his Return of Income, and the same should be treated, as if the assessee has retracted his statement. The ld Counsel stated that statement taken during Survey has no evidential value without any corroborative evidence and for this assessee relied on the following judgments: 1. Paul Mathews & Sons v. CIT-263 ITR 101(Ker)(HC) 2. CIT v. S. Khader Khan Son - 300 ITR 157 (Mad)(HC) Moreover, assessee, vide his letter dated 05.07.2018, during the assessment proceedings had requested the assessing officer to provide the copy of statement of the assessee recorded during the survey proceeding and other incrimination material on record on the basis of which addition of Rs.2,50,00,000/- on account of undisclosed income was made. However, the assessing officer failed to provide the incrimination material to the assessee in connection with the addition of Rs.2,50,00,000/-. 11 798 – 800, 809 & 810/SRT/2023/AY.2015-16, 2014-15 & 2017-18 Uday Chhasia 18. The ld Counsel further submitted that the Assessing Officer made new addition ( in second inning) under section 40(a)(ia) of the Act to the tune of Rs.10,78,23000/- on account of incrimination material found during survey, however, on appeal by the assessee, the ld. CIT(A) deleted the addition suo motu, (based on the statements of facts of the assessee) stating that there was no any incrimination material under section 40(a)(ia) of the Act for the alleged addition to the tune of Rs.10,78,23000/-. However, for addition of Rs.2,50,00,000/-, the assessing officer did not mention any incrimination material and hence addition was made based on the statement taken during survey. The statement taken during Survey has no evidential value without any corroborative evidence of incrimination material, hence addition of Rs.2,50,00,000/- may be deleted. 19. About returned loss of Rs.6,47,417/-, the Ld. Counsel submitted that the assessee has shown as a returned business loss, however, the assessing officer made addition without any base. The assessing officer did not demonstrate, with cogent evidence, in the assessment order that how the business loss cannot be allowed to the assessee, was the assessee`s business illegal, etc. was not stated by the assessing officer. Hence, ld Counsel for the assessee submitted that assessee should be allowed carry forward of business loss in accordance with Income Tax Act. 20. On the other hand, learned Commissioner of Income Tax - Departmental Representative (ld. CIT-DR) and learned Senior Departmental Representative (ld. Sr. DR) for the Revenue submitted that the assessee’s case was remanded back to the file of the Assessing 12 798 – 800, 809 & 810/SRT/2023/AY.2015-16, 2014-15 & 2017-18 Uday Chhasia Officer with the direction that the assessee will co-operate during the second inning, in assessment proceedings. However, again the assessee did not co-operate and did not file details before the Assessing Officer, therefore further innings should not be given to the assessee. The ld. CIT-DR submitted that although the assessee had submitted the written submission before the assessing officer, however before the ld. CIT(A), the assessee did not appear and ld CIT(A) passed the order on merit based on the statement of facts filed by the assessee along with Form No.35. Therefore, ld. DR contended that the order passed by the ld. CIT(A) is on merit, hence assessee`s appeal may be dismissed. 21. Learned Commissioner of Income Tax - Departmental Representative (ld. CIT-DR) further stated that addition was made by the assessing officer based on the statement taken during Survey, hence addition made by the assessing officer may be confirmed. 22. About returned loss of Rs.6,47,417/-, the Ld.CIT-DR stated that since the assessee has failed to furnish any explanation before the assessing officer, was well as before the ld CIT(A) therefore addition made by the assessing officer may be confirmed. 23. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. We note that in respect of addition to the tune of Rs.2,50,00,000/- made by AO under section 68 of the Act, based on the statement of the assessee taken during the survey proceedings, the assessee submitted following written submission 13 798 – 800, 809 & 810/SRT/2023/AY.2015-16, 2014-15 & 2017-18 Uday Chhasia before the assessing officer, which at the cost of repetition, are reproduced below for ready reference: “In response to the notices u/s 142 issued, the AR of the assessee, Shri Mehul Shah has submitted a reply vide letter dated 02.03.2021. The reply of the assessee is reproduced below for the sake of clarity: “1. With regard to the above subject and reference, it is submitted that the assessee maintains that there are no incriminating material found during the course of Survey u/s 133A in support of the addition made by the AO of Rs.2,50,00,000/-. 2. By not offering Rs.2,50,00,000/- in the Return of Income, the assessee has in a way retracted his statement and it is well settled law that the statement taken under Survey has no evidential value without any corroborative evidence. 3. It is well settled law that no addition can be made on the basis of statement recorded at the time of survey. The reliance is placed on the decision of the following cases: 1. Paul Mathews & Sons v. CIT-263 ITR 101(Ker)(HC) 2. CIT v. S. Khader Khan Son - 300 ITR 157 (Mad)(HC) 4. The assessee vide letter dated 05.07.2018 had requested the AO to provide the copy of statement of the assessee recorded during the survey proceeding and other incrimination material on record on the basis of which addition of Rs.2,50,00,000/- on account of undisclosed income is made.” 24. From the above written submissions, the following important points emerged: (i) During the survey proceedings no any incriminating material or tangible material was found by survey team in respect of addition to the tune of Rs.2,50,00,000/- under section 68 of the Act. (ii) The statement on oath taken during Survey has no evidential value without any corroborative evidence. (iii) The assessing officer while making the addition held that addition is made based on the material found during survey. However, the assessee, vide his letter dated 05.07.2018, during 14 798 – 800, 809 & 810/SRT/2023/AY.2015-16, 2014-15 & 2017-18 Uday Chhasia the assessment proceedings had requested the assessing officer to furnish him the incrimination material/corroborative evidences found during survey, by the survey team, in respect of addition of Rs.2,50,00,000/-, which the assessing officer failed to provide to the assessee, and made the addition without corroborative evidences. 25. First of all we note that the statement on oath is not permitted during Survey proceedings, for that reliance is placed on the judgment of Hon`ble High Court of Kerala in the case of PAUL MATHEWS & SONS, 263 ITR 0101, wherein the hon`ble Court held as follows: “11. The provision also enables the IT authority to impound and retain in his custody for such period as he thinks fit any books of account or other documents inspected by him, provided the authority records his reasons for doing so and also shall not retain the books of account for a period not exceeding 15 days. Sec. 133A(3)(iii) enables the authority to record the statement of any person which may be useful for, or relevant to, any proceeding under the Act. Sec. 133A however, enables the IT authority only to record any statement of any person which may be useful, but does not authorize for taking any sworn in statement. On the other hand, we find that such a power to examine a person on oath is specifically conferred on the authorised officer only under s. 132(4) of the IT Act in the course of any search or seizure. Thus, 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 does not empower any ITO to examine any person on oath. Thus, in contra-distinction to the power under s. 133A, s. 132(4) of the IT Act enables the authorised officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the IT Act. On the other hand, whatever statement recorded under s. 133A of the IT Act is not given any evidentiary value obviously for the reason that the officer is not authorised to administer oath and to take any sworn in statement which alone has the evidentiary value as contemplated under law. Therefore, there is much force in the argument of the learned counsel for the appellant that the statement, elicited during the survey operation has no evidentiary value and the ITO was well aware of this.” We note that in the assessee`s case under consideration, during the course of survey action u/s 133A of the I.T. Act, 1961, the statement of 15 798 – 800, 809 & 810/SRT/2023/AY.2015-16, 2014-15 & 2017-18 Uday Chhasia the assessee was recorded u/s 131 (1A) of the I.T. Act, 1961 on oath on 05.03.2014, which is against the provisions of law. 26. Besides, the statement taken during Survey has no evidential value without any corroborative evidence and for this reliance is placed on the judgment of Hon`ble High Court of Madras, in the case of S. Khader Khan Son, 300 ITR 157 (Madras), wherein the Hon`ble Court held that section 133A does not empower any ITO to examine any person on oath; so statement recorded under section 133A has no evidentiary value and any admission made during such statement cannot be made basis of addition. The detailed findings of the Hon`ble Court are as follows: “A power to examine a person on oath is specifically conferred on the authorities only under section 132(4) of the Act in the course of any search or seizure. Thus, the Income-tax Act whenever it thought fit and necessary to confer such power to examine a person on oath, has expressly provided for it, whereas section 133A does not empower any Income-tax Officer to examine any person on oath. Thus, in contradistinction to the power under section 133A, section 132(4) of the Income-tax Act enables the authorised officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the Income-tax Act. On the other hand, whatever statement recorded under section 133A of the Act is not given an evidentiary value, vide a decision of the Kerala High Court in Paul Mathews and Sons v. CIT [2003] 263 ITR 101. The scope of sections 132(4) and 133A also came up for consideration before the Kerala High Court in Paul Mathews and Sons v. CIT [2003] 263 ITR 101. In the said case, the assessee therein made an attempt to draw a distinction between the two provisions, viz., sections 132(4) and 133A. According to the assessee, there is no provision to administer oath or to take any sworn statement and that a mere admission or an acquiescence cannot be a foundation for an assessment and that any statement given during a survey has no effect as an "admission" nor can it be a statement on oath. According to the assessee, his statement during the survey with reference to any books of account cart hardly be the basis for any assessment. It was also contended on behalf of the assessee that any material collected or any statement recorded during the survey under section 133A cannot be put against the assessee, as the same has no evidentiary value. The Division Bench of the Kerala High Court, 16 798 – 800, 809 & 810/SRT/2023/AY.2015-16, 2014-15 & 2017-18 Uday Chhasia appreciating the stand taken by the assessee and after referring to section 133A of the Act, held as here- under (page 108) : "... we find that such a power to examine a person on oath is specifically conferred on the authorised officer only under section 132(4) of the Income-tax Act in the course of any search or seizure. Thus, the Income-tax Act, whenever it thought fit and necessary to confer such power to examine a person on oath, the same has been expressly provided whereas section 133A does not empower any Income-tax Officer to examine any person on oath. Thus, in contradistinction to the power under section 133A, section 132(4) of the Income-tax Act enables the authorised officer to examine a person on oath and any statement made by; such person during such examination 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 value obviously for the reason that the officer is not authorised to administer oath and to take any sworn statement which alone has evidentiary value as contemplated under law... Therefore, the statement elicited during the survey operation has no evidentiary value and the Income-tax Officer was well aware of this. (emphasis supplied) Similarly, when the issue, whether the expression "such other materials or information as are available with the Assessing Officer in section 158BB of the Income-tax Act, 1961, would include the materials gathered during the survey operation under section 133A, came up for consideration before this court in CIT v. G. JCSenniappan [2006] 284 ITR 220, a Division Bench of this court, in which one of us was a party (P.P.S. Janarthana Raja J.), answered the question in the affirmative, against the Revenue and in favour of the assessee, holding that the materials collected during the survey under section 133A cannot be taken into consideration while determining the undisclosed income in respect of block assessment as per section 158BB, as the same has no evidentiary value. Again, when an identical question whether the material found in the course of survey in the premises of the builder could be used in the block assessment of the assessee, came up for consideration before this Division Bench in an unreported case in T. C (A) No. 2620 of 2006, this court, by order dated November 22, 2006—since reported in CIT v. S. Ajit Kumar [2008] 300 ITR 152, of course, following the, earlier decision of this court in G.K. Senniappan's case reported in [2006] 284 ITR 220, while confirming the order of the Tribunal, answered the question in favour of the assessee, in limine. What is more relevant, in the instant case, is that the attention of the Commissioner and the Tribunal was rightly invited to the circular of the Central Board of Direct Taxes dated March 10, 2003, with regard to the confession of additional income during the course of search and seizure and survey operations. The said circular dated March 10, 2003, reads as follows: 17 798 – 800, 809 & 810/SRT/2023/AY.2015-16, 2014-15 & 2017-18 Uday Chhasia "Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search and seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, on confessions during the course of search and seizure and survey operations do not serve any useful purpose. It is, 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 the Income-tax Department Similarly, while recording statement during the course of search and seizure and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending, assessment proceedings also, the Assessing Officers should rely upon the evidences/materials gathered during the course-of search/survey operations or thereafter while framing the relevant assessment orders." From the foregoing discussion, the following principles can be culled out: (i) An admission is an extremely important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect and that the assessee should be given a proper opportunity to show that the books of account do not correctly disclose the correct state of facts, vide decision of the apex court in Pulkngode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 ; (ii) In contradistinction to the power under section 133A, section 132(4) of the Income-tax Act enables the authorised officer to examine a person on oath and any statement made by such person during such examination 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 is not given any evidentiary value obviously for the reason that the officer is not authorised to administer oath and to take any sworn statement which alone has evidentiary value as contemplated under law, vide Paul Mathews and Sons v. CIT [2003] 263 ITR 101 (Ker.); (iii) The expression "such other materials or 18 798 – 800, 809 & 810/SRT/2023/AY.2015-16, 2014-15 & 2017-18 Uday Chhasia Information as are available with the Assessing Officer" contained in section 158BB of the Income-tax Act, 1961, would include the materials gathered during the survey operation under section 133A, vide CIT v. G. K. Senniappan [2006] 284 ITR 220 (Mad.) ; (iv) The material or information found in the course of survey proceeding could not be a basis for making any addition in the block assessment, vide decision of this court in T. C (A) No. 2620 of 2006 (between CIT v. S. Ajit Kumar [2008] 300 ITR 152 (Mad.); (v) Finally, the word "may" used in section 133A(3)(iii) of the Act, viz., "record the statement of any person which may be useful for, or relevant to, any proceeding under this Act", as already extracted above, makes it clear that the materials collected and the statement recorded during the survey under section 133A are not conclusive piece of evidence by itself. For all these reasons, particularly, when the Commissioner and the Tribunal followed the circular of the Central Board of Direct Taxes dated March 10, 2003, extracted above, for arriving at the conclusion that the materials collected and the statement, obtained under section 133A would not automatically bind upon the assesses we do not see any reason to interfere with the order of the Tribunal. Accordingly, rinding no substantial question of law arises for consideration, the tax case appeal stands dismissed.” 27. We note that circular of the Central Board of Direct Taxes (CBDT) dated March 10 th , 2003, with regard to the confession of additional income during the course of survey operations, clearly states that confessions during the course of survey operations do not serve any purpose. It is, 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. Similarly, while recording statement during the course of survey operations no attempt should be 19 798 – 800, 809 & 810/SRT/2023/AY.2015-16, 2014-15 & 2017-18 Uday Chhasia made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely by CBDT. 28. Therefore, we note that in assessee`s case under consideration, the addition was made by the assessing officer based on the statement only, which is not permitted. Therefore, we note that during the survey proceedings no any incriminating material or tangible material was found by survey team in respect of addition to the tune of Rs.2,50,00,000/- and it is settled position of law that statement on oath taken during Survey has no evidential value without any corroborative evidence. The assessing officer did not bring on record any corroborative evidence to make addition except statement of assessee. Moreover, the assessee, vide his letter dated 05.07.2018, during the assessment proceedings had requested the assessing officer to furnish him the incrimination material/corroborative evidences found during survey, by the survey team, in respect of addition of Rs.2,50,00,000/-, which the assessing officer failed to provide to the assessee, and made the addition without corroborative evidences, which is not sustainable in the eye of law.We also note that during the assessment proceedings the assessee stated in the written submission that “By not offering Rs.2,50,00,000/- in the Return of Income, the assessee has in a way retracted his statement”, thus, we note that assessee has not accepted the statement recorded on oath during survey and rather it was retracted by him. Based on these facts and circumstances, we delete the addition of Rs.2,50,00,000/-. 29. In the result, ground No.3 raised by the assessee in ITA No.809, is allowed. 20 798 – 800, 809 & 810/SRT/2023/AY.2015-16, 2014-15 & 2017-18 Uday Chhasia 30. About returned loss of Rs.6,47,417/-, we find merit in the submission of Ld.CIT-DR to the effect that since the assessee has failed to furnish any explanation before the assessing officer, was well as before the ld CIT(A) therefore, we remit this issue back to the file of the assessing officer with the direction to the assessee to furnish explanation/justification of business loss before the assessing officer and then assessing officer should adjudicate the issue in accordance with law. 31. In the result, ground No.2 raised by the assessee in ITA No.809, is allowed for statistical purposes, in above terms. 32. Ground No.1 raised by the assessee in ITA No.809, is not pressed/not argued, therefore, we dismiss ground No.1 raised by the assessee, as not pressed/not argued. 33. Now we shall take assessee`s appeal in ITA No.798/SRT/2023 for AY.2015-16: Succinct facts qua the issue are that in this case, assessment order was passed by the Assessing Officer under section 271F of the Act, imposing penalty on the assessee of Rs.5,000/-, as the assessee did not file the return of income as per due date prescribed under section 139(1) of the Act. On appeal by assessee, the ld CIT(A) passed the ex-parte order confirming the action of the assessing officer. Aggrieved by the order of the ld CIT (A), the assessee is in further appeal before us. 34. Learned Counsel for the assessee submitted that assessee is an individual and filed his return of income on 13 th July 2016, declaring income of Rs. 29,06,960/-. The assessee`s case was selected for scrutiny and subsequently assessment order was framed under section 21 798 – 800, 809 & 810/SRT/2023/AY.2015-16, 2014-15 & 2017-18 Uday Chhasia 144 of the Act on 22 nd December, 2017 by the assessing officer. The assessee filed return of income belatedly and thus made the sufficient compliance. However, assessing officer levied penalty of Rs.5000/- under section 271F of the Act, which may be deleted, as the assessee filed return of income belatedly and thus made the sufficient compliance. 35. On the other hand, Learned DR for the revenue submitted that the assessee has not filed the original return of income within the time period prescribed under section 139 (1) of the Act, therefore, penalty imposed by the assessing officer should be sustained. 36. We have heard both the parties and noted that though the assessee did not file the return of income within the time limit prescribed under section 139(1) of the Act. However, the assessee has furnished the belated return of income under section 139(4), of the Act. The Act permits the assessee to file the belated return of income, in case he did not file original return of income u/s 139(1) of the Act, and the assessee has made sufficient compliance by filing belated return. Section 271F of the Income Tax Act, 1961, deals with the penalty for failure to furnish return of income. If an assessing officer has imposed a penalty under this section, it is possible for the penalty to be deleted or waived if sufficient cause is shown by the assessee. According to the assessee, there was a business loss hence assessee did have positive income, therefore assessee decided not to file the original return of income u/s 139 of the Act and this is the sufficient cause not to file the original return of income within the time prescribed under section 139(1), of the Income Tax Act. Therefore, assessee filed the belated return of income under section 139(4) of the Act. We note that the 22 798 – 800, 809 & 810/SRT/2023/AY.2015-16, 2014-15 & 2017-18 Uday Chhasia assessee has explained the sufficient cause or reason, not to leave the penalty under section 271F of the Act, therefore, we delete the penalty of Rs.5000/- imposed by the assessing officer under section 271F of the Act. 37. In the result, appeal filed by the assessee in ITA No. 798/SRT/2023, is allowed. 38. In the following appeals of the assessee, there is non-compliance before the assessing officer as well as ld CIT(A). The brief facts of these appeals are given below: (i) ITA No.799/SRT/2023 for AY.2015-16: In this case, assessment order was framed by the Assessing Officer under section 144 of the Act, as the assessee did not file the required details and documents before the Assessing Officer. On appeal, the ld. CIT(A) passed the ex-parte order on merit based on the material available on record. (ii) ITA No.800/SRT/2023 for AY.2015-16: In this case, Assessing Officer imposed penalty under section 271(1)(b) of the Act of Rs.20,000/- on account of non-compliance of notices by the assessee on dated 18.09.2017 and 09.10.2017. On appeal, the ld. CIT(A) passed ex-parte order and confirmed the penalty imposed by the assessing officer. (iii) ITA No.810/SRT/2023 for AY.2017-18: In this case, Assessing Officer framed the assessment under section 144 of the Act. The assessee has not filed return of income under section 139(1) of the Act. The assessee also has not filed the return of income in response to notice under section 148 of the Act. On appeal, the 23 798 – 800, 809 & 810/SRT/2023/AY.2015-16, 2014-15 & 2017-18 Uday Chhasia ld. CIT(A) decided the appeal, ex-parte based on the material available on record. 39. For the above three appeals of the assessee, namely, ITA No. 799/SRT/2023 for AY.2015-16, ITA No.800/SRT/2023 for AY.2015- 16, and ITA No.810/SRT/2023 for AY.2017-18, the Ld. Counsel for the assessee, argued that during the assessment stage sufficient opportunities were not given to the assessee by issuing more notices of hearings. During the appellate proceedings, before CIT(A), the notices of hearing were not delivered to the assessee, therefore assessee could not appear before the ld CIT (A). Therefore, ld Counsel contended that one more opportunity should be given to the assessee to plead these cases before the lower authorities. 40. On the other hand, ld. DR for the Revenue submitted that assessee was negligent during the assessment proceedings as well as during the appellate proceedings. Therefore, second inning should not be given to the assessee and these appeals of the assessee should be dismissed at this stage only. The ld. DR for the revenue also submitted that if the bench remits these appeals before the lower authorities, then heavy cost should be imposed on the assessee. 41. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. We note that during the assessment stage, the Assessing Officer has issued notices, however assessee could not appear. Before ld CIT (A), the assessee could not appear because the notices for hearings were not delivered to the assessee. Considering the 24 798 – 800, 809 & 810/SRT/2023/AY.2015-16, 2014-15 & 2017-18 Uday Chhasia above facts, we note that assessee could not plead his case successfully before the ld. CIT(A). We also note that Ld. CIT(A) has not passed the order as per the mandate of provisions of section 250(6) of the Act. That is, ld. CIT(A) did not pass order on merit based on the material available on record and based on assessee`s reply. Hence, we are of the view that one more opportunity should be given to the assessee to plead his case before the Assessing Officer. We note that it is settled law that principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being heard to contest his case. Therefore, without delving much deeper into the merits of the case, in the interest of justice, we restore the matter back to the file of Assessing Officer for de novo adjudication and pass a speaking order after affording sufficient opportunity of being heard to the assessee, who in turn, is also directed to contest his stand forthwith. Therefore, we deem it fit and proper to set aside the order of the ld. CIT(A) and remit these three appeals back to the file of the Assessing Officer to adjudicate the issue afresh on merits. The assessee is also directed to file the sufficient evidences and documents, if any, as and when, required by the assessing officer, for disposal of these appeals. For statistical purposes, these appeals of the assessee are treated as allowed. 42. In the result, these three appeals of the assessee, in ITA No.799/SRT/2023 for AY.2015-16, ITA No.800/SRT/2023 for AY.2015-16 and ITA No.810/SRT/2023 for AY.2017-18, are allowed for statistical purposes 43. In the combined result, the appeals of the assessee ITA Nos.809 SRT/2023 is partly allowed, appeal in ITA No.798/SRT/23 is allowed, 25 798 – 800, 809 & 810/SRT/2023/AY.2015-16, 2014-15 & 2017-18 Uday Chhasia and appeals in ITA No.799/SRT/2023 for AY.2015-16, ITA No. 800/SRT/2023 for AY.2015-16 and ITA No.810/SRT/2023 for AY.2017-18, are allowed for statistical purposes. Registry is directed to place one copy of this order in all appeals folder / case file(s). Order is pronounced on 28/03/2024 in the open court. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 28/03/2024 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat