2016 (4) TMI 74 - AT - Income Tax

Excess cash found during the course of survey - Held that - The material available on record the assessee had made the surrendered during the course of survey but immediately he verified the books of account and retracted from the disclosure. The statement recorded during the course of survey is not binding on the assessee as held by the Hon ble Supreme Court in Surjeet Singh Chhabra Vs. Union of India 1996 (10) TMI 106 - SUPREME COURT OF INDIA as same is not been a taken on oath. Further whatever cash found during the course of survey has been reconciled by the assessee and excess cash of ₹ 5,018/- has been confirmed by the CIT(A).- Decided against revenue Addition on account of unrecorded transaction - addition under the head unaccounted cash - Held that - It is undisputed facts that both the surrendered were made by the assessee during the course of survey but same had been retracted immediately by the assessee. The assessee disclosed an addition income on account of loose paper/diary found during the course of survey in return. There is no basis of the AO add further amount of ₹ 5.5 lac. Similarly the addition made under the head investment in House property is also based on surrendered admitted by the assessee. The AO had not made this addition on the basis of any incrementing documents of evidences. Thus we uphold the order of CIT(A) in allowing relief. - Decided against revenue

Summary

Issues involved:
1. Restriction of addition of excess cash found during survey
2. Deletion of addition on account of unrecorded transactions
3. Restriction of addition on account of investment in house property

Issue 1: Restriction of addition of excess cash found during survey

The appeal by the revenue was against the CIT(A)'s order restricting the addition of excess cash found during a survey. The AO had initially made an addition of Rs. 3,20,018, but the CIT(A) restricted it to Rs. 5,018. The AO found excess cash during a survey at the business premises of the assessee, who was in trading of Gold & Silver Jewellery. The assessee had surrendered an amount under duress during the survey, but later retracted the surrender, claiming the excess cash was only Rs. 5,018. The AO, however, relied on the statement made by the assessee during the survey and made the addition. The CIT(A) deleted the addition, noting that the assessee had reconciled the cash found during the survey to be Rs. 5,018, and the statement recorded during the survey was not binding on the assessee.

Issue 2: Deletion of addition on account of unrecorded transactions

The revenue's second ground was against the deletion of an addition of Rs. 5,50,000 made by the AO on account of unrecorded transactions. The AO had found loose papers, diaries, etc., during the survey containing unrecorded transactions, and the assessee had disclosed an income of Rs. 10 lakhs but only offered Rs. 10 lakhs for taxation. The CIT(A) deleted the addition, stating that the statement recorded during the survey was not binding on the assessee, and the assessee had retracted the surrender made during the survey after verifying the loose papers. The Tribunal upheld the CIT(A)'s decision, noting that the addition made by the AO was not based on any incriminating documents or evidence.

Issue 3: Restriction of addition on account of investment in house property

The third ground was against the restriction of the addition on account of investment in house property from Rs. 25,27,000 to Rs. 58,005. The AO had made the addition based on the valuation of the residential house property by the Department's valuation cell, which showed a difference of Rs. 58,005. The CIT(A) partly confirmed this addition, stating that the DVO report was available, and there was a difference in the investment made by the assessee and the valuation. The Tribunal upheld the CIT(A)'s decision, noting that the additions were based on surrendered amounts retracted by the assessee and not on any incriminating evidence.

In conclusion, the Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decision to restrict the additions made by the AO. The Tribunal found that the additions were based on surrendered amounts retracted by the assessee and lacked evidentiary support.