Dr. Amol Ramchandra Pawar, V. Income-tax Officer,

ITA 934/PUN/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0515 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-09-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 07-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: M.P. MACHAWE
• Keywords: Unexplained investment; Unexplained expenditure; Gift; Source of fund; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 133A; 143(2); 44AB; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 934/PN/2014 %' ( ')( / ASSESSMENT YEAR : 2009-10 DR. AMOL RAMCHANDRA PAWAR, A/P-PALUS, DISTT.-SANGLI-416310 PAN : AKDPP2798P ....... / APPELLANT ' / V/S. INCOME TAX OFFICER, WARD 1(4), SANGLI / RESPONDENT ASSESSEE BY : SHRI M.P. MACHAWE REVENUE BY : SHRI P.L. KUREEL / DATE OF HEARING : 19-09-2016 / DATE OF PRONOUNCEMENT : 31-10-2016 * / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS), KOLHAPUR DATED 03-02 -2014 FOR THE ASSESSMENT YEAR 2009-10. THE ASSESSEE HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING THE ADDITION OF ` 34,02,400/- U/S. 2 ITA NO. 934/PN/2014, A.Y. 2009-10 69 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) AS UNEXPLAINED INVESTMENT IN THE HOSPITAL BUILDING. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE IS A MEDICAL PRACTITIONER. A SURVEY ACTION 133A OF THE ACT WAS CARRIED OUT AT THE HOSPITAL PREMISES OF THE ASSESSEE ON 12-02-2009. DURING THE COURSE OF SURVEY, STATEMENT OF THE ASSESSEE WAS RECORDED WHEREIN THE ASSESSEE ALLEGEDLY DECLARED ADDITIONAL INCOME O F ` 34,02,400/-. AT THE TIME OF FILING OF RETURN OF INCOME ON 30-1 0-2009 THE ASSESSEE DECLARED TOTAL INCOME OF ` 3,62,290/-. FIRST NOTICE U/S. 143(2) WAS ISSUED TO THE ASSESSEE ON 08-03-2010. THE A SSESSEE VIDE COMMUNICATION DATED 04-03-2009 RETRACTED FROM THE DISCLO SURE STATEMENT MADE DURING THE COURSE OF SURVEY. HOWEVER, THE ASSESSING OFFICER MADE ADDITION OF ` 34,02,400/- AS UNEXPLAINED INVESTMENT IN THE HOSPITAL BUILDING U/S. 69 OF THE ACT. AGGRIEVED BY THE ASSESSMENT ORDER DATED 30-12-2011, T HE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF I NCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE IMPU GNED ORDER REJECTED THE CONTENTIONS OF THE ASSESSEE AND UP HELD THE FINDINGS OF ASSESSING OFFICER. NOW, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL. 3. SHRI M.P. MACHAWE APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS M.B.B.S., D. (ORTHO) AND IS PR ACTICING MEDICAL PROFESSION SINCE JANUARY, 2004 IN PALUS. THE ASSESS EE IS HAVING JOINT FAMILY CONSISTING OF HIS FATHER, MOTHER, BROTHER AND HIS WIFE. THEY HAVE JOINT FAMILY AGRICULTURAL LAND MEASURING ABOU T SIX ACRES IN YELAVI (8 KMS. FROM PALUS). THE AGRICULTURAL INCOME O F THE 3 ITA NO. 934/PN/2014, A.Y. 2009-10 FAMILY IS FROM GRAPE CULTIVATION WHICH ARE SOLD TO WINERIES AS WELL AS IN OPEN MARKET. THE ASSESSEE HAD STARTED CONSTRUCTION O F HOSPITAL BUILDING IN FINANCIAL YEAR 2006-07. THE HOSPITAL BUILDING WAS A LMOST COMPLETE IN JANUARY, 2009 EXCEPT FOR INTERIORS. THE ASSES SEE IS MAINTAINING BOOKS OF ACCOUNT WHICH ARE SUBJECT TO AUDIT U /S. 44AB OF THE ACT. THE ENTIRE EXPENDITURE ON CONSTRUCTION OF BUILD ING, PURCHASE OF PLOT ETC. IS DULY RECORDED IN THE BOOKS OF ACCOUNT. TH E ACCOUNTS ARE MAINTAINED FROM BEGINNING AND ARE SUPPORTED BY BILLS / VOUC HERS / RECEIPTS. DURING SURVEY U/S. 133A ON 12-02-2009 THE ST ATEMENT OF ASSESSEE WAS RECORDED AT 4 A.M. ON 13-02-2009. THE A SSESSEE ROUGHLY EXPLAINED THE COST OF CONSTRUCTION TO THE SURVEY PARTY AND THE SOURCE OF INVESTMENT. AT THE TIME OF SURVEY ALL THE FINANCIAL RECORDS OF THE ASSESSEE INCLUDING DETAILS OF PROFESSIONAL RECEIPTS, BILLS, BANK STATEMENTS, CONSTRUCTION EXPENSES BILLS ETC. WERE WITH TH E ACCOUNTANT AT SANGLI FOR THE PREPARATION OF ACCOUNTS. THEREFORE, THE ASSESSEE COULD NOT PRODUCE THE SAME DURING SURVEY. THE LD. AR REFERRED TO Q. NO. 10 FROM THE STATEMENT OF ASSESSEE, RECORDED DURING SURVEY. THE LD. AR POINTED THAT THE ASSESSEE DURING SURVEY HAD CATEGORICA LLY STATED THAT THE TOTAL EXPENDITURE ON CONSTRUCTION AS PER ARCHITECT S ESTIMATE IS APPROXIMATELY OF ` 65 LAKHS. TO MEET THE EXPENDITURE, THE ASSESSEE HAD TAKEN LOAN OF ` 35 LAKHS FROM BANK OF INDIA AND THE BALANCE AMOUNT WAS FUNDED FROM THE COMMON POOL OF JOINT FAMILY, AGRICULTURAL INCOME AND FRIENDS ETC. THE ASSESSEE UNDER GREAT STRESS AND PRESSURE ADMITTED TO THE ADDITION OF ` 34,02,400/- UNDER THE FOLLOWING HEADS. I. FOR CONSTRUCTION (UNEXPLAINED EXPENDITURE) ` 30,00,000/-. II. UNSECURED LOANS (UNIDENTIFIED UNSECURED LOANS) ` 97,000/-. III. INTERIOR DECORATION IN HOSPITAL ` 3,05,400/-. _____________ TOTAL ` 34,02,400/- 4 ITA NO. 934/PN/2014, A.Y. 2009-10 3.1 SUBSEQUENTLY, THE ASSESSEE ON 04-03-2009 I.E. WITHIN FO RTNIGHT RETRACTED FROM THE DISCLOSURE. THE ASSESSEE FURNISHED TH E DETAILS OF SOURCE OF FUNDS FOR INVESTMENT IN HOSPITAL BUILDING TO THE COMMISSIONER OF INCOME TAX-I, KOLHAPUR. THE LD. AR REFERRED TO THE LETT ER DATED 04-03-2009 ALONG WITH ANNEXURES AT PAGES 8 TO 15 OF TH E PAPER BOOK. THE LD. AR POINTED THAT THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAD FURNISHED THE DETAILS OF BANK ACCOUNT BEFO RE THE ASSESSING OFFICER, HOWEVER, THE SAME WAS NOT CONSIDERED. T HE ASSESSEE HAD GIVEN THE DETAILS OF ENTIRE EXPENDITURE INCURRED ON HO SPITAL DURING FINANCIAL YEARS 2006-07, 2007-08, AND 2008-09, AS WELL AS TH E SOURCE OF FUND TO MEET THE EXPENDITURE. HOWEVER, THE AUTHORITIE S BELOW BRUSHED ASIDE THE DETAILS AND THE DOCUMENTARY EVIDENCE FURNISHED BY THE ASSESSEE AND REMAINED FASTEN TO THE STATEMENT OF A SSESSEE RECORDED DURING SURVEY. THE SAID STATEMENT IS NOT SUPPORTED BY ANY CORROBORATIVE EVIDENCE. THE LD. AR POINTED THAT THE CBD T CIRCULAR DATED 18-12-2014 SUPPORTS THE CONTENTIONS OF THE ASSE SSEE. NO ADDITION CAN BE MADE MERELY ON THE BASIS OF STATEMENT W HICH IS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE. THE LD. AR FURTH ER PLACED ON RECORD YEAR WISE DETAILS OF EXPENDITURE ON CONSTRUCTION O F HOSPITAL BUILDING AS WELL AS SOURCE OF FUNDS TO MEET EXPENDITURE ON CONSTRUCTION OF BUILDING IN THE FINANCIAL YEAR 2008-09. THE LD. AR CONTEND ED THAT THE ASSESSEE IS LIABLE TO EXPLAIN EXPENDITURE ON CONSTRUC TION OF BUILDING INCURRED DURING ASSESSMENT YEAR 2009-10 ONLY. DURING T HE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2009-10 TO MEET THE COST OF CONSTRUCTION THE ASSESSEE HAD TAKEN HOUSING LOAN AND T ERM LOAN TO THE TUNE OF ` 24,51,987/- FROM BANK OF INDIA, JOINT FAMILY FUNDS ` 4,00,500/- , SALE OF GOLD ORNAMENTS OF HUF TO P.N. GADGIL JEWELERS ` 2,58,062/-, GIFT FROM FATHER ` 93,000/-, MATURITY AMOUNT OF INSURANCE POLICY FROM BAJAJ 5 ITA NO. 934/PN/2014, A.Y. 2009-10 ALLIANZ ` 65,000/- AND AMOUNT BORROWED FROM SHIVAJI DNYANU PATIL ` 1,50000/- AND ANNASAHEB SHINDE ` 40,000/-. THE LD. AR FURTHER EXPLAINED THAT JOINT FAMILY FUNDS INCLUDE INCOME FROM AGRICULT URAL INCOME FROM SALE OF GRAPES TO WINERIES. THE LD. AR REFERRED TO THE AFFIDAVITS OF HIS FATHER AT PAGES 34 TO 38 OF THE PAPER BOO K WHERE THE FATHER OF THE ASSESSEE ADMITTED TO THE GIFT AND CONTRIBUT ION OF FUNDS FROM JOINT FAMILY FUNDS. THE LD. AR CONTENDED THAT THE ASS ESSEE HAD BORROWED FUNDS FROM SHIVAJI DNYANU PATIL AND ANNASAHEB SH INDE THROUGH ACCOUNT PAYEE CHEQUES WHICH HAVE BEEN DULY R ECORDED IN THE BOOKS OF ACCOUNT. THE CONTRIBUTIONS FROM THE FAMILY FUNDS HAVE ALSO BEEN THROUGH BANKING TRANSACTION WHICH ARE REFLECTED IN T HE BANK STATEMENT OF THE ASSESSEE. HOWEVER, THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER OF INCOME TAX (APPEALS) BRUSHED ASIDE T HE AFFIDAVITS OF FATHER OF ASSESSEE, AS WELL AS BANK STATEMENT OF THE A SSESSEE. THE LD. AR PRAYED FOR SETTING ASIDE THE IMPUGNED ORDER AND DELET ING THE ADDITION. THE LD. AR IN SUPPORT OF HIS CONTENTIONS PLACED RE LIANCE ON THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF A JIT CHINTAMAN KARVE VS. ITO REPORTED AS 311 ITR (AT) 66 (PUNE). 4. ON THE OTHER HAND SHRI P.L. KUREEL REPRESENTING THE D EPARTMENT STRONGLY DEFENDING THE FINDINGS OF COMMISSIONER OF INCOME TA X (APPEALS) SUBMITTED THAT THE ASSESSEE HAD NEVER STATED BEFORE THE ASSESSING OFFICER OR THE COMMISSIONER OF INCOME TAX (APPEALS ) THAT THE STATEMENT RECORDED U/S. 133A WAS UNDER COERCION OR AN Y UNDUE INFERENCE. THE ASSESSEE HAD VOLUNTARILY DISCLOSED DURING T HE RECORDING OF STATEMENT THAT AN AMOUNT OF ` 68 LAKHS (APPROXIMATELY) HAS BEEN SPENT TILL THE DATE OF RECORDING OF STATEMENT ON CONSTRUC TION OF HOSPITAL. THE ASSESSEE HAD VOLUNTARILY ADMITTED ` 34,02,400/- AS ADDITIONAL 6 ITA NO. 934/PN/2014, A.Y. 2009-10 INCOME AND THE ASSESSEE EVEN OFFERED TO PAY TAX ON THE SAID AMOUNT. THE ASSESSEE HAD ISSUED CHEQUES TO THE TUNE OF ` 10,56,000/- TO DISCHARGE HIS TAX LIABILITY. THE ASSESSEE AT THE CONCLUSION OF STATEMENT HAD STATED THAT HE IS MAKING STATEMENT VOLUNTARILY AND WITHOUT ANY PRESSURE, THEREFORE, THE PLEA OF THE ASSESSEE AT A BELATE D STAGE THAT THE STATEMENT WAS RECORDED UNDER PRESSURE SHOULD NOT BE ACCEPTED. THE LD. DR FURTHER SUBMITTED THAT THE DECISION OF THE PUNE BE NCH OF THE TRIBUNAL ON WHICH THE LD. AR HAS PLACED RELIANCE IS DISTINGUISH ABLE ON FACTS. AS IN THE SAID CASE THE BOOKS OF ACCOUNT WERE AV AILABLE WHEREAS IN THE CASE OF ASSESSEE BOOKS WERE NOT FOUND DURING THE COURSE OF SURVEY. THE LD. DR PRAYED FOR DISMISSING THE APPEAL OF ASS ESSEE AND UPHOLDING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS). 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. THE SOLITARY ISSUE RAISED IN THE APPEAL IS WITH RESPECT TO ADD ITION OF ` 34,02,400/- MADE U/S. 69 OF THE ACT ON ACCOUNT OF EXPEND ITURE ON CONSTRUCTION OF HOSPITAL BUILDING. DURING THE COURSE OF SUR VEY, A STATEMENT OF THE ASSESSEE WAS RECORDED U/S. 133A OF T HE ACT. IN THE STATEMENT THE ASSESSEE HAD STATED THAT APPROXIMATELY ` 68,05,400/- HAS BEEN SPENT ON CONSTRUCTION OF HOSPITAL. TO MEET TH E COST OF CONSTRUCTION ` 35 LAKHS WAS TAKEN AS TERM LOAN/HOUSING LOAN FROM BANK OF INDIA, YELAVI BRANCH. SINCE, THE ASSESSEE COULD N OT EXPLAIN THE SOURCE OF REMAINING INVESTMENT ` 33,05,400/-, THE ASSESSEE ADMITTED THE SAME AS ADDITIONAL INCOME. THE ASSESSEE FURTHER COULD NOT EXPLAIN THE OUTSTANDING AMOUNT OF ` 97,000/-, THUS THE TOTAL SUM OF ` 34,02,400/- WAS ADMITTED BY THE ASSESSEE AS ADDITIONAL INC OME. SUBSEQUENTLY, THE ASSESSEE VIDE LETTER DATED 04-03-200 9 RETRACTED FROM 7 ITA NO. 934/PN/2014, A.Y. 2009-10 THE DECLARATION OF ADDITIONAL INCOME AND EXPLAINED THE SOURC E OF INVESTMENT IN HOSPITAL ALONG WITH DOCUMENTARY EVIDENCE. TH E ASSESSEE REITERATED THE SAME EXPLANATION BEFORE THE ASSESSING OFFICE R, AS WELL AS COMMISSIONER OF INCOME TAX (APPEALS). BOTH THE AUTHORITIES BELOW REJECTED THE CONTENTIONS OF THE ASSESSEE WITHOUT APPRE CIATING THE EVIDENCE FURNISHED BY ASSESSEE. BEFORE US THE ASSESSEE HAS AGAIN GIVEN THE DETAILS OF SOURCE OF FUNDS FOR INVESTMENT IN HOSPITAL DUR ING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2009-10. 6. A PERUSAL OF ASSESSMENT ORDER SHOWS THAT THE ASSES SING OFFICER HAS RECORDED THAT NO BOOKS OF ACCOUNT WERE FOUND DURIN G THE COURSE OF SEARCH. THE LD. AR EXPLAINED THAT ALL THE RELEVANT DOCUME NTS VIZ. PROFESSIONAL RECEIPTS, BILLS, BANK STATEMENTS, CONSTRUCTION EX PENSES BILLS ETC. WERE LAYING AT THE PREMISES OF THE ACCOUNTANT FOR PREPARATION OF ACCOUNTS AT SANGLI. THEREFORE, THE ASSESSEE AT THE T IME OF SURVEY COULD NOT PRODUCE ANY OF SUCH DOCUMENTS. A PERUSAL OF T HE AUDITED BALANCE SHEET PLACED ON RECORD AT PAGES 66 AND PROFIT A ND LOSS ACCOUNT FOR THE PERIOD 01-04-2008 TO 31-03-2009 AT PAGE 67 OF THE PAPER BOOK SHOW THAT THE BOOKS OF ACCOUNT WERE FINALIZED ON 31-10- 2009 BY THE CHARTERED ACCOUNTANT AT SANGLI. THEREFORE, WE FIND MERIT IN THE PLEA OF THE ASSESSEE. 7. IN SO FAR AS ADMISSION OF ` 34,02,400/- DURING THE COURSE OF SURVEY IS CONCERNED, WE FIND THAT THE ADDITION U/S. 69 IS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE. ON THE CONTRARY, THE ASS ESSEE HAS BEEN ABLE TO EXPLAIN THE SOURCE OF FUNDS ALONGWITH SUPPORTING DO CUMENTS. A PERUSAL OF THE DOCUMENTS ON RECORD SHOWS THAT THE ASS ESSEE HAS SPENT MORE THAN ` 70 LAKHS ON THE CONSTRUCTION OF HOSPITAL BUILDING EXCLUDING 8 ITA NO. 934/PN/2014, A.Y. 2009-10 COST OF LAND. THE SAID EXPENDITURE ON CONSTRUCTION IS SPR EAD OVER THE PERIOD OF 3 FINANCIAL YEARS I.E. 2006-07, 2007-08 AND 2008 -09 (UP TO 30-01-2009). THE SOURCE OF FUNDS FOR CONSTRUCTION OF HOSP ITAL BUILDING IN FINANCIAL YEAR 2008-09 (ASSESSMENT YEAR 2009-10) INCLUDES : I. BANK LOAN ` 24,51,987/-. II. JOINT FAMILY FUNDS ` 4,00,500/-. III. GOLD ORNAMENTS OF HUF SOLD TO P.N. GADGIL JEWELERS ` 2,58,062/-. IV. GIFT FROM FATHER ` 93,000/-. V. MATURITY AMOUNT OF INSURANCE POLICY FROM BAJAJ ALLIANZ ` 65,000/- VI. BORROWINGS FROM SHIVAJI DNYANU PATIL ` 1,50,000/- AND ANNASAHEB SHINDE ` 40,000/-. TOTAL ` 34,58,549/- TO SUBSTANTIATE SOURCE OF FUNDS THE ASSESSEE PLACED ON RECORD A COPY OF RECEIPT WITH RESPECT TO SALE OF GOLD ORNAMENTS OF HUF TO P.N. GADGIL JEWELERS AT PAGE 33 OF THE PAPER BOOK, AFFIDAVIT OF FAT HER AT PAGES 34 TO 37 OF THE PAPER BOOK, GIVING DETAILS OF INCOME RECEIV ED FROM SALE OF GRAPES TO WINERIES VIZ. SAIKRIPA, PYRAMID AND NIMA ETC. TH E AMOUNT OF ` 4,00,500/- RECEIVED FROM PYRAMID WINERIES PURPORTEDLY HAS BEEN TRANSFERRED TO THE BANK ACCOUNT OF ASSESSEE. IN SO FAR AS GIFT FROM FATHER ` 93,000/- IS CONCERNED THE LD. AR DRAWS OUR ATTENTION TO SEPARATE AFFIDAVIT OF THE FATHER AT PAGE 38 OF THE PAPER B OOK. SHRI R.B. PAWAR, FATHER OF THE ASSESSEE HAS ADMITTED THAT HE HAS GIVEN ` 93,000/- AS GIFT TO THE ASSESSEE BY WITHDRAWING THE AMOUNT FROM B ANK OF MAHARASHTRA AND THE SOURCE OF FUNDS FOR MAKING GIFT IS TH E MATURITY AMOUNT OF LIFE INSURANCE POLICY. THE BANK STATEMENT OF FAT HER OF THE ASSESSEE IS ALSO PLACED ON RECORD AT PAGE 22 OF THE PAP ER BOOK. THE 9 ITA NO. 934/PN/2014, A.Y. 2009-10 ASSESSEE HAS RECEIVED ANOTHER SUM OF ` 65,000/- FROM MATURITY OF HIS BAJAJ ALLIANZ POLICY. ` 1,90,000/- HAS BEEN BORROWED FROM SHIVAJI DNYANU PATIL AND ANNASAHEB SHINDE. THE SAID AMOUNTS HAV E BEEN RECEIVED THROUGH ACCOUNT PAYEE CHEQUE. THE DETAILS FURN ISHED BY THE ASSESSEE CLEARLY ESTABLISH THE SOURCE OF FUNDS. 8. THE CBDT VIDE CIRCULAR DATED 18-12-2014 HAD DEPRECIA TED THE PRACTICE OF MAKING ADDITION MERELY ON THE BASIS OF STATEME NT RECORDED DURING THE COURSE OF SEARCH/SURVEY WHERE SUCH STATEME NTS ARE NOT SUPPORTED BY ANY CREDIBLE EVIDENCE. THE RELEVANT EXTR ACT OF THE CBDT CIRCULAR READS AS UNDER : SUBJECT: ADMISSIONS OF UNDISCLOSED INCOME UNDER CO ERCION/PRESSURE DURING SEARCH/SURVEY REG. REF: 1) CBDT LETTER F. NO. 286/57/2002-IT (INV.II) DT. 03-07-2002 2) CBDT LETTER F. NO. 286/2/2003-IT(INV.II) DT. 10-03-2003 3) CBDT LETTER F. NO. 286/98/2013-IT(INV.II) DT. 09-01-2014 SIR/MADAM, INSTANCES/COMPLAINTS OF UNDUE INFLUENCE/COERCION HA VE COME TO NOTICE OF THE CBDT THAT SOME. ASSESSEES WERE COERCED TO ADMIT UND ISCLOSED INCOME DURING SEARCHES/SURVEYS CONDUCTED BY THE DEPARTMENT . IT IS ALSO SEEN THAT MANY SUCH ADMISSIONS ARE RETRACTED IN THE SUBSEQUEN T PROCEEDINGS SINCE THE SAME ARE NOT BACKED BY CREDIBLE EVIDENCE. SUCH A CTIONS DEFEAT THE VERY PURPOSE OF SEARCH/SURVEY OPERATIONS AS THEY FAIL TO BRING THE UNDISCLOSED INCOME TO TAX IN A SUSTAINABLE MANNER LEAVE ALONE L EVY OF PENALTY OR LAUNCHING OF PROSECUTION. FURTHER, SUCH ACTIONS SHO W THE DEPARTMENT AS A WHOLE AND OFFICERS CONCERNED IN POOR LIGHT. 2. I AM FURTHER DIRECTED TO INVITE YOUR ATTENTION TO THE INSTRUCTIONS/GUIDELINES ISSUED BY CBDT FROM TIME TO TIME, AS REFERRED ABOVE, THROUGH WHICH THE BOARD HAS EMPHASIZED UPON THE NEE D TO FOCUS ON GATHERING EVIDENCES DURING SEARCH/SURVEY AND TO STR ICTLY AVOID OBTAINING ADMISSION OF UNDISCLOSED INCOME UNDER COERCION/UNDU E INFLUENCE. 10 ITA NO. 934/PN/2014, A.Y. 2009-10 3. IN VIEW OF THE ABOVE WHILE REITERATING THE AFO RESAID GUIDELINES OF THE BOARD, I AM DIRECTED TO CONVEY THAT ANY INSTANCE OF UNDUE INFLUENCE/COERCION IN THE RECORDING OF THE STATEMENT DURING SEARCH/SUR VEY/OTHER PROCEEDING UNDER THE I.T. ACT, 1961 AND/OR RECORDING A DISCLOS URE OF UNDISCLOSED INCOME UNDER UNDUE PRESSURE/COERCION SHALL BE VIEWE D BY THE BOARD ADVERSELY. 9. THE HON'BLE MADRAS HIGH COURT IN THE CASE OF COMMISSIO NER OF INCOME TAX VS. S. KHADER KHAN SON REPORTED AS 300 ITR 157 (MAD) HAS HELD THAT ANY ADMISSION MADE BY THE ASSESSEE IN STATEME NT RECORDED U/S. 133A HAS NO EVIDENTIARY VALUE. NO ADDITION CAN BE MA DE ON THE BASIS OF SAID STATEMENT ALONE. THE HON'BLE SUPREME COURT OF INDIA HAS UPHELD THE JUDGMENT OF HON'BLE MADRAS HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. S. KHADER KHAN SON REPOR TED AS 352 ITR 480 (SC). 10. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF AJIT CHINTAMAN KARVE VS. ITO (SUPRA) UNDER SIMILAR CIRCUMSTANCES WHERE NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SUR VEY OPERATION AND ADDITION WAS MADE ONLY ON THE BASIS OF OFFER MADE BY ASSESSEE, THE TRIBUNAL OBSERVED : MERELY BECAUSE AN OFFER WAS MADE HAVING NO COGENT BASIS OR AN APPROVAL OF LAW THAT SHOULD NOT ESTOP A TAXPAYER FR OM CORRECTING HIS MISTAKE. RATHER, IT IS A DUTY OF THE REVENUE DEPAR TMENT TO TAX THE LEGITIMATE AMOUNT FROM A TAXPAYER. THIS IS WHAT EX ACTLY WAS DIRECTED BY THE CENTRAL BOARD OF DIRECT TAXES IN THE VERY OLD A DMINISTRATIVE INSTRUCTIONS FOR GUIDANCE OF THE INCOME-TAX OFFICER ON MATTERS PERTAINING TO ASSESSMENT VIDE CIRCULAR NO. 14 (XL-35), DATED A PRIL 11, 1955. 11. IN THE PRESENT CASE, WE FIND THAT ALTHOUGH THE ASS ESSEE DURING SURVEY PROCEEDINGS HAD ADMITTED ` 34,02,400/- AS ADDITIONAL INCOME DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR 2009-10, HOWEVER, 11 ITA NO. 934/PN/2014, A.Y. 2009-10 SUBSEQUENTLY VIDE LETTER DATED 04-03-2009 THE ASSESS EE HAS RETRACTED FROM SAID ADMISSION. APART FROM THE STATEMENT OF ASSESSEE THERE IS NO OTHER DOCUMENTARY EVIDENCE WHICH SUGGEST UNDISCLOSED INC OME OF THE ASSESSEE. RATHER THE ASSESSEE HAS FURNISHED CREDIBLE E VIDENCE TO SUBSTANTIATE SOURCE OF FUNDS. IN SUCH CIRCUMSTANCES ADD ITION ON THE BASIS OF STATEMENT RECORDED U/S. 133A CANNOT SUSTAIN. W E FIND MERIT IN THE APPEAL OF THE ASSESSEE. ACCORDINGLY, IMPUGNED ORDE R IS SET ASIDE AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON MONDAY, THE 31 ST DAY OF OCTOBER, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 31 ST OCTOBER, 2016 RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A), KOLHAPUR 4. ' / THE CIT-I, /II, KOLHAPUR/CIT (CENTRAL), PUNE 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE