RAM BATTERY INDIA PRIVATE LIMITED,ERODE V. DCIT, CENTRAL CIRCLE 1, COIMBATORE

CO 37/CHNY/2025

AI Insights

The case involves an appeal by the Deputy Commissioner of Income Tax against Ram Battery India Private Limited concerning the assessment year 2020-21. The revenue challenged the CIT(A)'s decision which had deleted the additions made by the Assessing Officer following a survey under Section 133A of the Income Tax Act. The survey had led to admissions by the Managing Director of the assessee company regarding undisclosed investments and unaccounted rental income. However, the CIT(A) and subsequently the Tribunal found that these admissions were not substantiated by any material evidence and thus, the additions were not justified.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712985 (ITAT-CHENNAI)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2020-2021
• Other Referred Cases: Bannalal Jat Construction Pvt. Ltd. V. ACIT, CIT v. S. Khader Khan Son, Pullangode Rubber Produce Co. Ltd. v. State of Kerala, Commissioner of Income-tax, Trichy v. P. Balasubramanian, CIT v. Dhingra Metal Works
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S. SRIDHAR
• Assessee Lawyers: R. ANITHA
• Keywords: Set aside; Business income; Unexplained investment; Income from undisclosed sources; Documents seized; Onus to prove; Retraction; Search and seizure; Block assessment; Loose papers
• Section: 131; 133A

Judgement Text

"आयकर अपीलीय अधिकरण, ‘’सी’’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI माननीय श्री मनु क ुमार गिरि, न्यागयक सदस्य एवं माननीय श्री एस.आर.रघुनाथा ,लेखा सदस्य क े समक्ष । BEFORE HON’BLE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND HON’BLE SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.1167/Chny/2025 ननिाारण वर्ा/Assessment Year: 2020-21 Deputy Commissioner of Income Tax, Central Circle-1, Coimbatore v. Ram Battery India Private Limited, No.406, Perundurai Road, Erode, Tamil Nadu- 638 009. [PAN: AAGCR3898A] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) CO No.37/Chny/2025 ननिाारण वर्ा/Assessment Year: 2020-21 Ram Battery India Private Limited, No.406, Perundurai Road, Erode, Tamil Nadu- 638 009. [PAN: AAGCR3898A] Deputy Commissioner of Income Tax, Central Circle-1, Coimbatore (अपीलार्थी/Cross Objector/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Appellant by : Ms. R.Anitha, Addl. CIT. प्रत्यर्थी की ओर से /Respondent by : Mr.S.Sridhar, Advocate (Erode) for Cross Objector / Respondent सुनवाईकीतारीख/Date of Hearing : 29.07.2025 घोर्णाकीतारीख /Date of Pronouncement : 31.07.2025 आदेश / O R D E R PER MANU KUMAR GIRI, JM: This is an appeal (ITA No.1167/Chny/2025) preferred by the revenue against the order of the Ld. Commissioner of Income Tax (Appeal), Printed from counselvise.com ITA No.1167 & CO-37/Chny/2025 (AY 2020-21) Ram Battery India Pvt Ltd :: 2 :: Chennai-20 (in short ‘the Ld.CIT(A)’), dated 30.01.2025 for the Assessment Year (in short ‘AY’) 2020-21 and assessee has also filed Cross Objection No.37/Chny/2025 in ITA No.1167/Chny/2025. 2. The registry has noted that the appeal has been filed after delay of ‘24’ days and the assessee has filed an affidavit explaining the delay. Having gone through the contents of the affidavit, we are satisfied that there is sufficient cause for the delay. Therefore, we condone the delay of ‘24’ days and proceed to adjudicate the grounds of appeal raised by the revenue. 3. The revenue has raised the following grounds of appeal: The Ld.CIT(A) erred in deleting the addition of Rs.1,53,47,650/- despite the assessee's voluntary admission during the survey regarding the undisclosed investments. Reliance is placed on the order of the Hon'ble Supreme Court in the case of Bannalal Jat Construction Pvt. Ltd. V. ACIT (2019) which upheld such additions unless properly disproven. The Ld.CIT(A) wrongly deleted the addition of Rs.87,83,236/- towards unaccounted rental income despite the assessee admitting during the survey that rental income was not fully accounted for. The deletion was based on lack of corroborative evidence, ignoring the assessee's own admission, which was never retracted. The Ld.CIT(A) erred in shifting the burden of proof to the department instead of requiring the assessee to substantiate the retraction with documentary evidence. Since, the assessee admitted to undisclosed income in his sworn statement, the onus is on him to prove otherwise, which was not done in this case. For these grounds and any other ground including amendment of grounds that may be raised during the course of appeal Printed from counselvise.com ITA No.1167 & CO-37/Chny/2025 (AY 2020-21) Ram Battery India Pvt Ltd :: 3 :: proceedings, the Order of the Ld.CIT(Appeals) may be set aside and that of the Assessing Officer may be restored. 4. The assessee has raised the following Cross Objection: 1. The grounds by the Appellant Revenue are without any reasons and are baseless. 2. The CIT(A) is justified in deleting the addition with respect to Rs. 1,53,47,560/-, as the same was without any incriminating material and was based only on statement recorded under Section 133A which by itself does not have evidentiary value. 3. The CIT(A) is justified in deleting the addition with respect to Rs. 87,83,236/-, for the Assessing Officer has not brought on record any details and in possession of any evidence with respect to the alleged unaccounted rental income and other income. And for all other reasons that may be adduced at the time of hearing, the Respondent prays that this cross-objections be considered in the right perspective and that the appeal by the Appellant Revenue be dismissed in the interest of justice. 5. Brief facts of the case are that the assessee is a company engaged in manufacturing and trading batteries and also running a hotel cum restaurant. A survey u/s.133A of the IT Act was conducted on 05/03/2020 in the business premises of the assessee company. A sworn statement u/s.131 were recorded from the Managing Director of the assessee company by the Assessing Officer wherein he has stated as under: a) Difference in stock - Rs. 9,86,174/-; b) Income on account of interior decoration, land purchase, and purchase of kitchen equipments, furnitures, etc. of Rs.1,52,47,650/-; c) Other sources Rs.87,83,236/-. Printed from counselvise.com ITA No.1167 & CO-37/Chny/2025 (AY 2020-21) Ram Battery India Pvt Ltd :: 4 :: Thus, the total admission was for Rs.2,50,17,600/-. The assessee company filed its return of income for the impugned assessment year 2020-21 on 25/01/2021, declaring a total business income of Rs.7,61,670/-. Not satisfied with the replies filed in response to the notices issued, the Assessing officer had completed the assessment order u/s.143(3) dt.02/03/2022 by making (i) an addition of Rs.9,86,154/- being difference in stock, (ii) Unaccounted investment of Rs.1,53,47,650/- (iii) Unexplained income Rs.87,83,236/-, thereby determining a total assessed income at Rs.2,58,78,710/-. Aggrieved, the assessee filed appeal before the ld.CIT(A). 6. Before the ld. CIT(A), the ld. AR of the assessee contended that there is no whisper/mention as to how the sum of Rs.1,53,47,650/- was arrived at by the survey authorities. The assessee has also stated that the sum of Rs.89,10,000/- mentioned under \"Building Hotel Ram Inn\" represents expenditure on interior, furniture, etc. incidental to its business. Further, the assessee has stated that the expenditure towards interior, furniture, etc, was made in earlier years. However, the AO has made the addition in the current year, more particularly in the absence of any corroborative evidence during survey. The assessee has placed reliance on decision of the Hon'ble Supreme Court in the case of CIT v. S. Khader Khan Son [2013] 352 ITR 480 (SC) and the CBDT instruction dated 10.03.2003 in F.NO. 286/2/2003-IT (INV. II). Printed from counselvise.com ITA No.1167 & CO-37/Chny/2025 (AY 2020-21) Ram Battery India Pvt Ltd :: 5 :: 6. The ld. CIT(A), upon hearing the assessee on the issue of Unexplained Investment of Rs.1,53,47,650/- has passed following order as under: On perusal of the above statement recorded from Shri. L.R.Mahesh on 05.03.2020, firstly it is noticed that the appellant had made an admission of Rs.1,52,47,650/- in the above statement, whereas, the AO has made an addition of Rs.1,53,47,650/- in the assessment order without adducing any reason for the variation. It is pertinent to note here that there is no reference to any corroborative evidence, found during the course of survey, which leads to the conclusion that the appellant has made any unexplained investments in the Hotel, let alone any investment made during the year under consideration. Further, it is also noticed that there is no basis as to how the amount of Rs.1,52,47,650/- has been arrived at both by Shri. L.R.Mahesh and the AO. Furthermore, it is noticed from Q.No. 9 of the statement that when asked about the source for the construction/interior decoration of hotel and restaurant building etc, Shri L.R.Mahesh had replied that the said purchase and constructions were done with bank loan, rental income and their savings. The CBDT, vide instruction dated 10.03.2003 in F. NO. 286/2/2003- IT (INV. II), has clearly 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 and while recording statement during the course of search & seizure and survey operations, no attempt should be made to obtain confession as to the undisclosed income. The CBDT had further directed that 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. However, in the present case, there is no adverse finding in the form of material evidence gathered during the course of survey which points to any unexplained investment made by the appellant to the tune of Rs. 1,52,47,650/-. Moreover, during the assessment proceedings, the appellant had submitted before the AO that the actual expenditure on interior, furniture, etc, to the tune of Rs.89,10,000/- incidental to the business was already accounted in their books under \"Building Hotel Ram Inn\". Thus, the appellant was able to prove that the admission made by him during the survey Printed from counselvise.com ITA No.1167 & CO-37/Chny/2025 (AY 2020-21) Ram Battery India Pvt Ltd :: 6 :: was factually incorrect and not based on any material found during the survey. From the above discussion, it is clear that the addition has been made solely on the statement recorded during the survey without any corroborative material found to that effect during the survey. It is now a well-settled law that such admission made by an assessee in the statement without any incriminating material cannot form the basis for an addition. Therefore, the addition of Rs.1,53,47,650/- is deleted. 7. The ld. CIT(A), on the issue of Unaccounted rental income and other income of Rs.87,83,236/- has passed following order as under: Similar to the above addition of unexplained investment, this addition has also been made on the basis of the admission made by the appellant in the statement recorded during the survey. It is also noticed that the AO has stated in the assessment order that Shri. L.R.Mahesh, had confessed that the company had received rental income which was not properly accounted for and on this account, he had admitted a sum of Rs.87,83,236/-. The AO has not brought on record any details and also in possession of evidence such as the property from which such rental income has been received, details of parties from whom the said rental income was received, mode of receipt of the rental income, amount of rental receipt from the properties and rental agreement or any noting in support of the claim that the appellant has concealed the rental income in this regard. Also, neither the assessment order nor the statement recorded from Shri. L.R.Mahesh contains any details as to how the said amount of Rs.87,83,236/- has been arrived at. During the appeal proceedings, the appellant has contended that a bald statement, with no evidence at all to support the addition and with no break-up/details of the sum of Rs.87,83,236/- is required to be deleted. This issue is also similar to the issue of unexplained investment as disused in the above paragraphs. Thus, for the reasons already discussed in Para 6.2.3 & 6.2.4 of this order, this addition also cannot be sustained. Therefore, the said addition of Rs.87,83,236/- on account of other unaccounted income is deleted. Printed from counselvise.com ITA No.1167 & CO-37/Chny/2025 (AY 2020-21) Ram Battery India Pvt Ltd :: 7 :: Now, revenue is in appeal before us where as the assessee is in Cross Objection. 8. Before us, the ld.DR for the revenue contended that statement recorded during survey cannot be ignored. She further submitted that after recording statement assessee is not justified taking volte-face against the said statement. She also referred para 20 of the judgment of the Hon’ble Rajsthan High court in the case of Bannalal Jat Constructions (P.) Ltd Vs ACIT [2019] 106 taxmann.com 127 (Raj) which is as under: 20. Subsequently, on 04.12.2014 during the post-search proceedings, statement of Shri Bannalal Jat was again recorded under Section 131 of the IT Act, wherein he was again confronted with the various documents seized and cash found during the course of search and the consequent surrender made by him in respect of his two concerns and in response thereto, he again confirmed the surrender of undisclosed income amounting to Rs.1,21,43,210/- and Rs.1,35,00,000/-. It is in this background that we have to view his reply to the show-cause notice submitted on 02.12.2016. This show-cause notice was issued to him by the assessing officer when the appellant-company offered the said undisclosed income to tax. The reliability, importance and sanctity of admission made during search could be refuted only by cogent and convincing evidence. We may in this connection refer to earliest judgment of the Supreme Court in Pullangode Rubber Produce Co. Ltd., (supra) wherein it was held that admission is an extremely important piece of evidence but it can't be said that it is conclusive. It is open to the person, who made admission to show that it is incorrect. The assessee should be given proper opportunity to show the correct state of affairs. The law with regard to this has developed much thereafter. There is no gainsay the fact that admission made during the search can be disputed by the assessee and at the same time however it is equally well settled that the statement made voluntarily by the assessee could form the basis of assessment. Mere fact that the assessee retracted the statement at later point of time could not make the statement Printed from counselvise.com ITA No.1167 & CO-37/Chny/2025 (AY 2020-21) Ram Battery India Pvt Ltd :: 8 :: unacceptable. The burden lay on the assessee to show that the admission made by him in the statement earlier at the time of survey was wrong. Such retraction, however, should be supported by a strong evidence stating that the earlier statement was recorded under duress and coercion, and this has to have certain definite evidence to come to the conclusion that indicating that there was an element of compulsion for assessee to make such statement. However, a bald assertion to this effect at much belated stage cannot be accepted. The assessee indulged in maintaining transaction on diaries and loose papers which was not permissible in any of the method of accounting. The assessee, while filing the return of income, has not disclosed any undisclosed income and hence, retracted from the admission made by him during the course of search. Subsequent retraction from the surrender without having evidence or proof of retraction is not permissible in the eyes of law. The statement recorded during the course of search action which was in presence of independent witnesses has overriding effect over the subsequent retraction. 9. Per contra, the ld.counsel for the assessee has contended that except the statement during survey nothing was seized or found. The statement was recorded despite no corroborative material was noticed or gathered or found during survey. He further, submitted that the revenue authorities were wrongly recorded the statement in violation of the CBDT instruction dated 10.03.2003 in F.N.286/2/2003-IT(INV.II). 10. We have heard the rival submissions and perused the record and case law citation referred. We find from the record that there is no reference to the any corroborative evidence, found during the course of survey which leads to the conclusion that the appellant has made any investment in the hotel during the year under consideration. It is also not known that how Shri L.R. Mahesh and Printed from counselvise.com ITA No.1167 & CO-37/Chny/2025 (AY 2020-21) Ram Battery India Pvt Ltd :: 9 :: AO arrived at the amount of Rs.1,52,47,650/-. No documents have been referred by the Shri L.R. Mahesh and AO. We also find that during assessment proceedings, the assessee had submitted before the AO that the actual expenditure on interior, furniture etc. to the tune of Rs.89,10,000/- incidental to the business was already accounted in their books under ‘Building Hotel Ram Inn’. Therefore, in this case by filing the expenditure, the assessee has duly shown that the statement made was not correct. The Supreme Court in Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 held that 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. Any statement recorded under section 133A would have evidentiary value only if supported with materials and form the basis for assessment. 11. The jurisdictional High Court in the case of Commissioner of Income-tax, Trichy v. P. Balasubramanian [2013] 33 taxmann.com 130 (Madras)/[2013] 215 Taxman 288 (Madras) held as under: 15. After elaborately referring to the decisions of Paul Mathews & Sons (supra); CIT v. G.K Senniappan [2006] 284 ITR 220/155 Taxman 118 (Mad.) and CIT v. Ajit Kumar [2008] 300 ITR 152 (Mad.) and the Circular of the Central Board of Direct Taxes dated March 10, 2003 with regard to confession statement of additional income during the course of search and seizure and survey operations, the Division Bench of this Court in CIT v. S. Khader Khan Son [2008] 300 ITR 157 (Mad.) has summarised the principles as under: Printed from counselvise.com ITA No.1167 & CO-37/Chny/2025 (AY 2020-21) Ram Battery India Pvt Ltd :: 10 :: (i) 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 and that the assessee should be given a proper opportunity to show that the books of accounts do not correctly disclose the correct state of facts, vide decision of the Apex Court in Pullangode 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 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, vide Paul Mathews & Sons (supra); (iii) The expression \"such other materials or 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 G.K. Senniappan, (supra); (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 Ajit Kumar (supra); (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.\" In CIT v. Dhingra Metal Works [2010] 328 ITR 384/[2011] 196 Taxman 488 (Delhi), the Delhi High Court held that while Section 132(4) of the Act specifically authorises an Officer to examine a person on oath, Section 133A did not permit the same. The Delhi High Court further held that the word \"may\" used in Section 133A(3)(iii) of the Act clarifies beyond doubt that the material collected and the statement recorded during the survey was not a conclusive piece of evidence by itself and that Assessing Officer could not have made the addition solely on the basis of the statement made on behalf of the assessee during the course of survey. Printed from counselvise.com ITA No.1167 & CO-37/Chny/2025 (AY 2020-21) Ram Battery India Pvt Ltd :: 11 :: 16. Mr. Narayanaswami, learned counsel appearing for the revenue submitted that even though statement under Section 133A was not at par with the statement under Section 132(4), such statement recorded under Section 133A cannot be held to be irrelevant material and in the absence of any explanation by the assessee, the Commissioner of Income-tax (Appeals) rightly made enhancement. In support of his contention, the learned counsel placed reliance upon a decision of Punjab and Haryana High Court in Bachittar Singh v. CIT [2010] 328 ITR 400. 17. The Punjab and Haryana High Court held that even if the statement under section 133A was not at par with the statement under section 132(4) and did not have that evidentiary value, such statement cannot be held to be irrelevant material so as to be ruled out of consideration in totality of facts, particularly in the absence of regular books of account. In the facts and circumstances of the case that the assessee failed to produce books of accounts, which may have been maintained during the regular course of business or any other authentic contemporaneous evidence of agricultural income, the Punjab & Haryana High Court held that the statement under Section 133A cannot be held to be irrelevant material. In our considered view, in the factual matrix of present case, the above decision of Punjab & Haryana High Court is not applicable. 18. The Hon'ble Supreme Court in Pullangode Rubber Produce Co. Ltd.(supra) held that 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. Any statement recorded under Section 133A would have evidentiary value only if supported with materials and form the basis for assessment. In his explanation, the assessee stated that he has been doing job work and the remaining 2100 gms had been given to 3 Asaris. The Officers had not verified whether the gold was available with the said Asaris nor chosen to examine the said Asaris. The statement recorded during survey operation under Section 133A may be a relevant material. But in the absence of further materials to substantiate the same, such statement recorded under Section 133A can hardly be the basis for assessment. During the survey, 900 gms of gold was found in the premises of the assessee and the statement of the assessee was supported only to the extent of actual seizure of 900 gms. Since the statement of assessee in respect of the remaining gold was not substantiated, the Tribunal rightly set aside the addition in respect of the gold. 12. AS cited by ld. DR for the revenue, the case of Bannalal Jat Constructions (P.) Ltd Vs ACIT [2019] 106 taxmann.com 127 (Raj), Bannalal was confronted with the various documents seized and cash found during the course of Printed from counselvise.com ITA No.1167 & CO-37/Chny/2025 (AY 2020-21) Ram Battery India Pvt Ltd :: 12 :: search and the consequent surrender made by him. In this present case, nothing was found or seized during survey, hence the judgment in Bannalal Jat Constructions (P.) Ltd is not at all applicable here. 13. Our above observation is equally applicable to the unaccounted rental income of Rs.87,83,236/-. There is no corroborative evidence to support the addition made by the AO on this account except the statement made. 14. Hence, in the light of the above factual matrix and case law referred we are not inclined to interfere with the order of the ld.CIT(A), therefore, affirm the same on both additions. 15. In the result, appeal filed by the revenue in ITA No.1167/Chny/2025 is dismissed and CO. No.37/Chny/2025 is allowed. Order pronounced on the 31st day of July, 2025, in Chennai. Sd/- (एस.आर.रघुनाथा) (S. R. RAGHUNATHA) लेखा सदस्य/ACCOUNTANT MEMBER Sd/- (मनु क ुमाि गिरि) (MANU KUMAR GIRI) न्यानयक सदस्य/JUDICIAL MEMBER चेन्नई/Chennai, ददनांक/Dated 31st July, 2025. KB, Sr.PS 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकरआयुक्त/CIT, Chennai / Madurai / Salem / Coimbatore. 4. विभागीयप्रविविवि/DR 5. गार्डफाईल/GF Printed from counselvise.com "