2015 (3) TMI 750 - AT - Income Tax

Additions on the basis of Admission / statement made during survey - statement retracted later - whether Assessing Officer has failed to establish by bringing on record any evidence that addition of ₹ 5,00,000 and ₹ 69,00,000 was warranted and called for - amount of ₹ 75 lakhs is surrendered as additional income for the financial year 2008-09 over and above any regular income as per books of account - Held that - We fail to understand that once the assessee has retracted from surrender within seven days and has in fact complained against high headedness of the survey team led by the Additional Commissioner of Income-tax, what prevented the Department from making any enquiries in respect of the persons from whom so called receivables were there which had not been recorded in the books of account. As held by the hon'ble Supreme Court in case of Pullangode Rubber Produce Co. Ltd. v. State of Kerala 1971 (9) TMI 64 - SUPREME Court that admission is important piece of evidence but the person making admission can show that such admission is not correct. Once this was done by the assessee, the onus was on the Revenue to make enquiries and only then some addition could have been made on the basis of such enquiries. The submissions clearly show that no address is mentioned. It does not indicate that the amount is receivable. If the assessee admitted during the survey that these amounts represent receivables, the Revenue should have at least extracted address of such persons and when the assessee retracted from the surrender then the statements of these persons should have been recorded which has not been done. There is a clear cut overwriting in the inventory of notes of ₹ 500. Further there is no mention about any note found in the denomination of ₹ 50. These features also create doubt regarding the genuineness of the survey. Thus addition has been made without any evidence and is merely on the basis of statement recorded during the survey which cannot be sustained. Accordingly we set aside the order of the learned Commissioner of Income-tax (Appeals) and delete the addition. - Decided in favour of assessee.

Issues Involved:
1. Legitimacy of the income assessed by the Assessing Officer.
2. Validity of the addition of Rs. 5,00,000 and Rs. 69,00,000 by the Assessing Officer.
3. Voluntariness of the surrender made by the assessee.
4. Consideration of the assessee's representations and communications to tax authorities.
5. Requirement of evidence to justify the addition of Rs. 5,00,000 and Rs. 69,00,000.
6. Admission of additional evidence under section 46A.

Issue-wise Detailed Analysis:

1. Legitimacy of the Income Assessed by the Assessing Officer:
The primary contention was the discrepancy between the income returned by the assessee (Rs. 2,87,610) and the income assessed by the Assessing Officer (Rs. 76,87,610). The assessee argued that the assessment was erroneous and based on an involuntary surrender made during a survey.

2. Validity of the Addition of Rs. 5,00,000 and Rs. 69,00,000 by the Assessing Officer:
The Assessing Officer added Rs. 69,00,000 as receivables and Rs. 5,00,000 as cash, based on documents and statements obtained during the survey. The assessee retracted the surrender, claiming it was made under coercion and based on forged documents. The tribunal noted that the discrepancies were not clearly specified, and the addition was made without corroborative evidence.

3. Voluntariness of the Surrender Made by the Assessee:
The assessee argued that the surrender of Rs. 75,00,000 was not voluntary but obtained under intimidation by the survey team. The tribunal found that the surrender was retracted within a week, and the assessee had written multiple complaints to higher authorities, indicating the surrender was coerced. The tribunal emphasized that a statement recorded during a survey under section 133A does not have evidentiary value and cannot be the sole basis for addition.

4. Consideration of the Assessee's Representations and Communications to Tax Authorities:
The assessee's communications to the Additional Commissioner of Income-tax and the Commissioner of Income-tax were not adequately considered. The tribunal noted that no proper enquiry was conducted into the assessee's complaints about the coercion and the alleged forgery by the survey team.

5. Requirement of Evidence to Justify the Addition of Rs. 5,00,000 and Rs. 69,00,000:
The tribunal highlighted that the addition was made without any corroborative evidence. The slips indicating receivables did not have addresses or clear indications of amounts receivable. The tribunal stressed the importance of corroborative evidence, as per the Supreme Court's ruling in Pullangode Rubber Produce Co. Ltd. v. State of Kerala, which states that an admission is an important piece of evidence but not conclusive.

6. Admission of Additional Evidence Under Section 46A:
The assessee sought to introduce additional evidence to prove that the alleged receivables were non-existent. The Commissioner of Income-tax (Appeals) refused to admit this evidence, arguing that the assessee had sufficient opportunities to present it earlier. The tribunal found this refusal unjustified, given the circumstances of the case.

Conclusion:
The tribunal concluded that the addition was made without proper evidence and was based solely on a statement recorded during the survey, which lacks evidentiary value. The tribunal set aside the order of the Commissioner of Income-tax (Appeals) and deleted the addition. The tribunal also criticized the high-handedness of the Revenue authorities and directed the Assessing Officer to refund the taxes collected immediately. The appeal of the assessee was allowed.

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