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2012 (12) TMI 13 - AT - Income TaxReopening of assessment due to findings of certain incriminating documents during the course of survey proceedings u/s 133 at business premises of assessee and her associates - AO has recorded following reasons for reopening jointly for Shri Tarun(associate) and Shardaben (assessee) that income chargeable to tax to the extent of the investment made in the land and building, flats and shops either in name of Shri Traun or in the name of somebody else whose ownership appears to be of the assessee escaped assessment - Held that - It is evident that there is no whisper of any irregularities committed by the assessee. Further, no incriminating documents pointing out the assessee suppressing any materials to establish escapement of income in her hands was found during the course of survey proceedings which is evident from the reasons recorded u/s 148. The assessee was also not found to be the owner of any other flats/shops/plots mentioned in the reasons for reopening recorded by the AO. In these circumstances, we do not find any justification for issuance of notice u/s 148 to the assessee. Order set aside - Decided in favor of assessee Income from undisclosed sources addition u/s 69 based on statement recorded during survey Held that - It is apparent that the revenue has not come out with any corroborative evidence to support the statement obtained from the assessee s son in order to establish undisclosed income of the assessee. Board Circular F. NO.286/2/2003 dated 10-03-2003 is binding on the revenue. Addition made on mere statement on oath obtained at the time of survey cannot be relied upon to make addition without bringing forth any other materials on record to support the stand of the revenue. Addition is directed to be deleted - Decided in favor of assessee
Issues Involved:
1. Legality of reopening assessments under sections 147 and 148 of the Income Tax Act for AY 1999-2000 and 2000-01. 2. Validity of additions made under the head of unexplained advances from customers and unexplained credits for AY 1999-2000 and 2000-01. 3. Legality of additions made for AY 2005-06 based on a statement obtained during a survey under section 133A of the Act. Issue-wise Detailed Analysis: 1. Legality of Reopening Assessments under Sections 147 and 148 of the Income Tax Act for AY 1999-2000 and 2000-01: The assessee challenged the reopening of the assessments on several grounds: - The notice under section 148 was issued after five years and seven months, which the assessee claimed was time-barred. - The reasons for reopening were recorded jointly for the assessee and another individual, which the assessee argued were not specific and arbitrary. - There was no material before the AO indicating escapement of income pertaining to the assessee. The CIT(A) dismissed these grounds, stating that the AO issued the notice after recording reasons based on material impounded during the survey. The Tribunal, however, quashed the reassessment orders, noting that: - The reasons recorded for reopening did not specifically mention any lapses by the assessee. - The reasons were general and not specific to the assessee's business activities. - The Tribunal referenced related cases where reassessments were quashed due to similar issues, such as the case of Shri Tarun K. Mody and M/s. Triloknath Corporation. 2. Validity of Additions Made Under the Head of Unexplained Advances from Customers and Unexplained Credits for AY 1999-2000 and 2000-01: Since the Tribunal quashed the reassessment orders for AY 1999-2000 and 2000-01, it did not adjudicate on the merits of the additions made under the head of unexplained advances from customers and unexplained credits. The Tribunal's decision to quash the reassessment orders was based on the lack of jurisdiction under sections 147 and 148. 3. Legality of Additions Made for AY 2005-06 Based on a Statement Obtained During a Survey Under Section 133A of the Act: The assessee contested the additions made for AY 2005-06, arguing that they were based solely on a statement obtained during a survey, which is not given evidentiary value under section 133A. The Tribunal noted: - The addition of Rs.36,00,000/- was made based on the statement of the assessee's son, without any corroborative evidence. - The CBDT Circular F. No. 286/2/2003 dated 10-03-2003 advises against making assessments based solely on confessions obtained during surveys. - The Tribunal referenced the case of CIT Vs Khader Khan Son, where it was held that statements recorded under section 133A do not have evidentiary value. The Tribunal concluded that the revenue did not provide any corroborative evidence to support the statement obtained during the survey. Therefore, it deleted the addition of Rs.36,00,000/- made by the AO and sustained by the CIT(A). Conclusion: In summary, the Tribunal allowed the appeals of the assessee for the assessment years 1999-2000, 2000-01, and 2005-06. The reassessment orders for AY 1999-2000 and 2000-01 were quashed due to lack of jurisdiction under sections 147 and 148. The additions made for AY 2005-06 based on a statement obtained during a survey were deleted due to the absence of corroborative evidence.
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