Gurukiran Jayaram Shetty , Bangalore V. Deputy Commissioner of Income Tax Circle-2(3)(1), Bangalore

ITA 890/BANG/2017

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 7027 (ITAT-BANGALORE)
• Duration Of Justice: 4 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2021
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 20-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 133A; 234B; 207; 48; 13; 119

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC-A” BENCH : BANGALORE BEFORE N.V.VASUDEVAN, VICE-PRESIDENT ITA No.890/Bang/2017 Assessment Year : 2012-13 Shri. Gurukiran Jayaram Shetty, No.94/5, 2 nd Main, 5 th Cross, Widia Layout, Attiguppe, Vijayanagar, Bengaluru – 560 040. PAN : AFVPG 5167 N Vs.The Deputy Commissioner of Income Tax, Circle-2(3)(1), Bengaluru. AppellantRespondent Assessee by:Shri.Mukesh Kumar Jain, CA Revenue by :Shri. Ganesh R. Ghale, Standing Counsel for the Department Date of hearing: 06.12.2021 Date of Pronouncement: 06.12.2021 O R D E R Per N.V. Vasudevan, Vice-President: This is an appeal by the assessee against the order dated 19.01.2017 of CIT(A)- 2, Bengaluru, relating to Assessment Year 2012-13. 2. The revised grounds of appeal raised by the assessee before the Tribunal reads as follows: 1.The order of learned Commissioner of Income Tax (Appeals) is against law and facts of the case. 1.1 The learned Commissioner of Income Tax (Appeals) has erred in stating that appellant would be in a position to estimate his correct income for the year after passing of 4months in the previous year. ITA No.890/Bang/2017 Page 2 of 14 1.2 The learned Commissioner of Income Tax (Appeals) has erred in stating that the estimation of income by the assessee during the course of survey was correct. 1.3 The learned Commissioner of Income Tax (Appeals) has erred in stating that there is a findings of Survey which showed substantial investment in house constructions and furnishings for which no declared source of income was available with appellant. 1.4 The learned Commissioner ought to have appreciated that there is no substantive evidence on record in support of addition to the income. 1.5 The learned Commissioner of Income Tax (Appeals) has erred in stating that a self declaration brings stop to further investigation by the assessing officer and ought to have considered the Circular binding on the assessing officer 1.6 The learned Commissioner of Income Tax (Appeals) has erred in stating that the self declaration was not made under coercion. 1.7 The learned Commissioner of Income Tax (Appeals) is not justified in concluding the assessment solely on the declaration made by the appellant. 1.8 The learned Commissioner of Income Tax (Appeals) has erred in sustaining additions which are not based on any of the provisions of Income tax Act. 1.9 The learned Commissioner of Income Tax (Appeals) ought to not have concluded the assessment without having considered the precedents relied. 2.The learned Commissioner of Income Tax (Appeals) ought not to have upheld the order of the assessment made in the gross violation of principles of natural justice and without meeting the submissions made before the assessing officer during the course of hearing. 3.Without prejudice to the above, the learned Commissioner of Income Tax (Appeals) is not justified in failing to appreciate that the appellant has maintained the books of accounts and the same has been audited under Section 44AB, and without anything more, the learned assessing officer ought to have accepted the book results. 4.The learned Commissioner of Income tax (Appeals) has erred in confirming the levy of interest u/s 234B and u/s 234C. 5.In view of the above and on other grounds to be adduced at time of hearing. It is requested to the Honorable bench that the impugned order be. ITA No.890/Bang/2017 Page 3 of 14 5.1 Quashed or at least the addition made be deleted. 5.2 The interest charged under section 234B be deleted 5.3 Any other relief as justified in the facts and circumstances of the case. 3. The only issue that arises for consideration in this appeal is as to whether the Revenue authorities were justified in determining the total income of the assessee at a sum of Rs.50 lakhs as against the sum of Rs.14,22,180/- declared by the assessee in his return of income filed for Assessment Year 2012-13. 4. The facts and circumstances under which the aforesaid issue arises for consideration are that the assessee who is an individual is a music director in Kannada movie industry. There was a survey under section 133A of the Income Tax Act, 1961 (hereinafter called ‘the Act’) conducted in the case of the assessee on 17.08.2021. The statement recorded at the time of survey is given as annexure to this order. 5. It can be seen from the statement of the annexed to this order that the assessee did not maintain any books of accounts for Assessment Year 2012-13 (answer to question No.5). Another question which is relevant for the present appeal is question No.10 and answer to the said question in which assessee submitted that for the financial year 2011-12 (Assessment Year 2012-13), he did not compose music for any film whereas for Financial Year 2009-10 and 2010-11 (Assessment Year 2010- 11 & 2011-12) he composed music for 4 and 3 movies respectively. In answer to question No.11, he admitted that he used to receive cash from movie producers which are not accounted in the books of accounts. In answer to question No.14 with regard to entries of cash payments for house construction as reflected in note book Nos.GK8, GK5 and GK 7, the assessee agreed that the construction of house was made out of cash receipts which have not been accounted in the books of accounts and that he would offer a sum of Rs.50 lakhs each for Assessment Years 2011-12 and 2012-13 respectively. In so far as the Assessment Year 2011-12 is concerned, the assessee ITA No.890/Bang/2017 Page 4 of 14 honoured the commitment made in the statement made at the time of survey by declaring total income of Rs.49,02,360/- which includes the sum of Rs.50 lakhs declared at the time of survey under section 133A of the Act. However, for Assessment Year 2012-13, the assessee filed return of income declaring total income of Rs.14,22,180/- after claiming deduction of Rs.1,13,347/- under Chapter VI A of the Act. 6.The AO, after making a reference to the statement given at the time of survey, proceeded to determine the total income of the assessee at a sum of Rs.50 lakhs. It is an admitted position that the sum of Rs.50 lakhs determined as total income is only based on the statement recorded at the time of survey and no material whatsoever found at the time of survey was the basis of determination of the total income at Rs.50 lakhs. The AO also made a reference to the decision of the Hon’ble Karnataka High Court in the case of T P Indra Kumar Vs. ITO 322 ITR 454 (Karnataka) wherein the Hon’ble Karnataka High Court upheld the assessment passed on admission made at the time of survey. 7. Aggrieved by the determination of total income at Rs.50 lakhs, assessee preferred appeal before the CIT(A). A specific plea of the assessee before the CIT(A) was that the statement made at the time of survey has no evidentiary value because it was made by the assessee under coercion and undue influence. The addition made therefore cannot be sustained. The specific plea made by the assessee was based on CBDT’s Circular No.F-286/2/203 dated 10.03.200. and Circular dated 18.12.2014. In these circulars, the CBDT has emphasized the need for the officers conducting survey / search to collect credible evidence rather than obtaining confessions which are generally retracted in subsequent proceedings. It was also submitted that the admission made by the assessee was not conclusive and that assessee was not afforded an opportunity of showing that the statements made by him is not true and correct. ITA No.890/Bang/2017 Page 5 of 14 8. The CIT(A) confirmed the order of the AO by observing that the assessee was not in a position to show that the sum declared at the time of survey was erroneous. The CIT(A) also observed that the survey was conducted on 19.08.2011 and a period of 4 months of the previous year relevant to Assessment Year 2012-13 had elapsed at the time of survey. The assessee was in a position to reasonably estimate his income for Assessment Year 2012-13 at the time of survey and he had adduced no valid reasons as to why the declaration at the time of survey turned out to be incorrect subsequently. The CIT(A) also found that there was substantial investments in house construction and furnishing and the income declared by the assessee was not sufficient to explain the source. The CIT(A) also held that there was no evidence brought on record to show that the declaration made at the time of survey was out of coercion or undue influence. The CIT(A) also found that the very same declaration made at the time of survey was honoured by the assessee for Assessment Year 2011- 12 but the same was not honoured for Assessment Year 2012-13 and no valid reasons have been given for not offering income in Assessment Year 2012-13 as declared at the time of survey. The CIT(A) also held that the plea of the assessee that the statement given at the time of survey was obtained by coercion cannot be true for Assessment Year 2012-13 and not true for Assessment Year 2011-12. The CIT(A) accordingly dismissed the appeal of the assessee. 9. Aggrieved by the order of the CIT(A), asssessee is in appeal before the Tribunal. The submission of the learned Counsel for the assessee is almost identical to the submission as made before the lower authorities. The plea of the assessee was that the addition made purely on the basis of statement given at the time of survey cannot be sustained in the absence of credible evidence found at the time of survey which will show that the income declared at the time of survey was correct. Learned Counsel for the assessee reiterated that the statement given at the time of survey was given under coercion and undue influence. When a specific question was put by the Bench as to how in respect of the very same statement at the time of survey the ITA No.890/Bang/2017 Page 6 of 14 assessee honoured the statement in Assessment Year 2011-12 but did not honour it in Assessment Year 2012-13, the learned Counsel for the assessee did not give any specific answer except pointing out that even at the time of survey in answer to question No.10, the assessee had stated that he did not compose music for any movies in Assessment Year 2012-13 and therefore his estimation of income at the time of survey has to be viewed on the facts and circumstances that prevailed after 17.8.2011. Several judicial pronouncements were cited before me. The sum and substance of all these decisions is that admissions are good pieces of evidences but not conclusive. The person making the admission is always at liberty to show at the admission made by him was erroneous or was made under mistake. The proposition laid down in the decisions cited by the learned Counsel for the assessee was that in the absence of any material to substantiate the declaration made at the time of the survey, the addition cannot be made purely on the basis of the statement recorded at the time of survey. The decision cited in this regard among other decisions are the following decisions: Pullangode Rubber Produce Co.Ltd. vs. State of Kerala. (1973) 91 ITR 18 An admission is extremely an 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. CIT v Dhingra Metal Woks (2010) 328 ITR 384/ 48 DTR 230/ 236 CTR 621/ (2011) 196 Taxman 488 No addition can be made to the total income or an adverse inference drawn merely on the basis of admission at the time of survey. PaulMathewsand Sons V CIT (2003) 129 Taxman 416/ 263 ITR 101/ 181 CTR 207 The statement elicited during the survey operation has no evidentiary value. The Court has held that Section 133A permits recording of statement, but does not authorise the person, taking the statement, to administer oath before recording the statement, which power is conferred u/s 132(4) of the Act only. Thus, in contra-distinction to Section 133A, Section 132(4) enables the authorised officer to examine a person on oath and any statement made by such person during such examination can be used in evidence under the Act. Therefore, the evidence recorded u/s 133A has no evidentiary value. CIT v S. Khader Khan Sons 300 ITR 157 Materials collected and the statement obtained under Section 133A would not automatically bind upon the assessee CIT Vs.Uttamchand Jain Income Tax Appeal No 634 of 2009, It was held the retracted confession can be reified only there is independent and cogent evidence to corroborate the statement Abdul Oayume Vs CIT (1990) 184 ITR 404 It is settled law that though an admission is extremely important piece of evidence, it cannot be said to be conclusive and it is open to the person who has made the admission to show that it is incorrect; ITA No.890/Bang/2017 Page 7 of 14 10. Learned DR reiterated the stand of the Revenue as reflected in the order of the CIT(A) and relied on the following decisions: 1.Copy of the decision of the Hon'ble High court of Delhi in the case of Raj Hans Towers (P) Ltd vs. Commissioner of Income Tax V (2015) 56 taxmann.com 67 (Delhi) ITA No. 24 of 2015 dated 27/01/2015 2.Copy of the decision of the Hon'ble High court of Delhi in the case of Principal Commissioner of Income Tax (C)-2, New Delhi V. Avinash Kumar Setia (2017) 81 taxmann.com 476 (Delhi) ITA No. 935 of 2016 dated 01/05/2017 3.Copy of the decision of the Hon'ble High court of Punjab & Haryana in the case of Navdeep Dhingra V. Commissioner of Income Tax, Karnal (2015) 56 taxmann.com 75 (Punjab & Haryana) ITA No. 178 of 2013 dated 20/01/2015 4.Copy of the decision of the Hon'ble High court of Allahabad in the case of Sanjeev Agarwal V. Income Tax Settlement Commissioner (2015) 56 taxmann.com 214 (Allahabad) WP No. 1879 of 2009 dated 16/02/2015 5.Copy of the decision of the Hon'ble High court of Hyderabad in the case of 19 Income Tax Officer V. Medum Surya Prakash (2001) 119 taxmann.com 67 (Hyd.) (MAG.) ITA No. 1777 of 1996 dated 01/02/2000 11. I have carefully considered the rival submissions and the material on record. The facts of the case are very material and have to be noticed. There was a survey conducted in the case of the assessee on 17.08.2011. In the course of survey, the assessee admitted receiving receipts from producers in cash which are not recorded in the books of accounts. The evidence found in the course of survey also show that the assessee had made cash payments for construction of house which are not appearing in the books of accounts. The assessee admitted that he earned income which was not disclosed in the books of accounts and agreed to offer a sum of Rs.50 lakhs for each of Assessment Years 2011-12 and 2012-13. The assessee declared a sum of Rs.50 lakhs as per the statement given at the time of survey in the return of income for Assessment Year 2011-12 but did not declare Rs.50 lakhs offered at the time of survey in the return of income filed for Assessment Year 2012-13. The plea ITA No.890/Bang/2017 Page 8 of 14 of the assessee that the statement recorded at the time of survey was obtained under undue influence or coercion cannot be accepted because the very same statement was the basis on which the assessee filed return of income for Assessment Year 2011-12. The assessee’s explanation before the tribunal is that the sum of Rs.50 lakhs declared at the time of survey in so far as it relates to Assessment Year 2012-13 was not correct and was declared on an erroneous assumption. Learned Counsel submitted that even at the time of survey in answer to question No.10, assessee has specifically mentioned that he did not compose music in movies in Assessment Year 2012-13 and that he composed music for 4 movies in Assessment Year 2010-11 and 3 movies in Assessment Year 2011-12. In Assessment Year 2010-11, the assessee had declared total income of Rs.26,68,051/- and in Assessment Year 2011-12, the assessee declared total income of Rs.50 lakhs as agreed at the time of survey. It is also a fact that assessee had incurred expenses on construction of house outside the books of accounts. All these circumstances would show that the assessee cannot say that the statement made at the time of survey in so far as it relates to Assessment Year 2012- 13 upto 17.8.2011 was erroneous or was made in mistake. But in so far AY 2012-13 is concerned, the previous year would be the period between 1.4.2011 to 31.3.2012. The date of Survey was 17.8.2011. As on the date of survey a period of 4 months and 17 days elapsed and therefore the income of Rs.50 lacs declared for the whole year cannot be taken at the face value. It can hold good for proportionate period i.e., 137 days / 364 days x Rs50 lacs, which will be a sum of Rs.18.77 lacs (approx.). The assessee already declared a sum of Rs.15,35,527 as gross total income and after claiming deduction under chapter VI A of the Act of Rs.1,13,347 declared a total income of Rs.14,22,180/-. The assessee has not been in a position to explain with supporting material as to why the declaration of income made upto to the period 17.8.2011 is also incorrect and therefore the total income of the assessee has to be assessed at Rs.18.77 lacs. as attributable to the period upto 17.8.2011. It is admitted position that there is nothing incriminating material for the period after 17.8.2011 except the statement recorded at the time of survey. We cannot ignore the statement of the assessee at the time of survey that the assessee did not compose music for any ITA No.890/Bang/2017 Page 9 of 14 films in the previous year relevant to AY 2012-13. At the same time, the assessee cannot seek to rely on decisions rendered on facts of individual cases and submit that the addition should be deleted because it was not made on the basis of evidence found in the course of survey. As we have already observed, the statement alone without substantiating material cannot be the basis to make any addition but in the present case, the circumstances under which the statement was made and declaration of income at the time of survey have also to be seen viz., the assessee admitted receiving receipts from producers in cash which are not recorded in the books of accounts, evidence found in the course of survey showing that the assessee had made cash payments for construction of house which are not appearing in the books of account and admission of the assessee that he earned income which was not disclosed in the books of accounts. In so far as the period after 17.8.2011 is concerned, the proportionate income declared by the assessee would be 198 days/ 365 days x 15,35,527/-, which would be a sum of Rs.8,32,970/- (approx.). In my view it would be just and appropriate and fair to assess the total income of the assessee at a sum of Rs.18.77 lacs + Rs.8,32,970, i.e., at a sum of Rs.27,09,970 – Rs.1,13,347 being Chapter VI A deduction, i.e., a sum of Rs.25,96,623/- as against the total income returned of Rs.14,22,180/-. I do not wish to go into the legal proposition set out in the various decisions cited by the learned AR and learned DR and would rest my conclusions on the factual aspects of the present case and keeping in mind probability and fairness. I am in agreement with the conclusions of the CIT(A) in so far as it relates to the period upto 17.8.2011 and in agreement with the submissions of the learned counsel for the assessee in so far as it relates to the period after 17.8.2011. Accordingly, I hold that the total income of the assessee has to be assessed at Rs. 25,96,623/- and partly allow the appeal of the assessee. ITA No.890/Bang/2017 Page 10 of 14 12. In the result, appeal of the assessee is partly allowed. Pronounced in the open court on the date mentioned on the caption page. Sd/- Sd/- Bangalore. Dated: 07.12.2021. /NS/* Copy to: 1.Appellants2.Respondent 3.CIT4.Guard file By order Assistant Registrar, ITAT, Bangalore. (CHANDRA POOJARI)(N. V. VASUDEVAN) Accountant Member Vice President ITA No.890/Bang/2017 Page 11 of 14 ANNEXURE ITA No.890/Bang/2017 Page 12 of 14 ITA No.890/Bang/2017 Page 13 of 14 ITA No.890/Bang/2017 Page 14 of 14