2016 (10) TMI 58 - AT - Income Tax

Addition on account of additional income declared in the course of survey u/s 133A on oath - addition on unexplained credit - Held that - Assessing Officer, without discussing the case of a single creditor, rejected all of them. Learned CIT(A) has discussed all those documents from page 5 to 17 of his order. The Assessing Officer made the addition of ₹ 3,50,00,000/- as unexplained credit u/s 68 when admittedly, the sum of ₹ 3,50,00,000/- was the surrender made by the assessee during the course of survey and was not the amount of credit in the assessee s books of account. Credit in the assessee s books of account was only ₹ 3,09,84,715/-. Learned CIT(A) has also recorded the finding that the credit to the extent of ₹ 1,28,39,715/- was not pertaining to the year under consideration. Thus, it is evident that the Assessing Officer made the addition without considering all the facts and evidences on record merely because the assessee has surrendered the same at the time of search. We have already discussed that in view of the decision of Hon ble Jurisdictional High Court in the case of Dhingra Metal Works (2010 (10) TMI 29 - DELHI HIGH COURT ) and of Hon ble Apex Court in the case of S. Khader Khan Son (2013 (6) TMI 305 - SUPREME COURT ) as well the Circular of CBDT vide letter F.No.286/2/2003-IT(Inv.II) dated 10th March, 2003, the addition cannot be made only on the basis of surrender made at the time of survey. - Decided in favour of assessee

Summary

Issues Involved:
1. Deletion of addition of ?3,50,00,000/- declared during survey under section 133A.
2. Validity of retraction of surrender made during the survey.
3. Evidentiary value of statements recorded under section 133A.
4. Compliance with section 68 requirements for proving cash credits.

Issue-wise Detailed Analysis:

1. Deletion of Addition of ?3,50,00,000/- Declared During Survey Under Section 133A:

The Revenue challenged the CIT(A)'s decision to delete the addition of ?3,50,00,000/-. The assessee had surrendered this amount during a survey conducted under section 133A of the Income-tax Act, 1961. The Assessing Officer (AO) added this amount as unexplained credit under section 68, but the CIT(A) found that the assessee had provided sufficient evidence to discharge the onus of proving the genuineness of the credits. The CIT(A) noted that ?1,28,39,715/- of the credits did not pertain to the assessment year under consideration and that the assessee had provided comprehensive documents, including application forms, KYC documents, and proof of identity for each depositor.

2. Validity of Retraction of Surrender Made During the Survey:

The assessee retracted the surrender made during the survey through a letter dated 7th September 2010, submitted on 8th September 2010. The Revenue argued that the retraction, made almost ten months after the survey, was an afterthought and should not be given undue weight. However, the assessee contended that the surrender was made under coercion and pressure, as it was impossible to verify the genuineness of over 3,000 creditors instantly during the survey. The CIT(A) accepted the retraction, noting that the assessee had not included the surrendered amount in its income tax return and had provided voluminous evidence during the assessment proceedings.

3. Evidentiary Value of Statements Recorded Under Section 133A:

The Tribunal referred to precedents, including the Hon'ble Jurisdictional High Court's decision in CIT Vs. Dhingra Metal Works and the Hon'ble Madras High Court's decision in CIT Vs. S. Khader Khan Son, which held that statements recorded under section 133A do not have conclusive evidentiary value. The Tribunal noted that section 133A does not authorize officers to administer an oath and record sworn statements, unlike section 132(4). Therefore, the addition based solely on the statement made during the survey was not justified.

4. Compliance with Section 68 Requirements for Proving Cash Credits:

The Tribunal observed that the assessee had provided extensive evidence to prove the genuineness of the credits, including more than 7,000 pages of documents. The AO acknowledged the submission of these documents but dismissed them without detailed examination. The CIT(A) found that the assessee had complied with the requirements of section 68 by providing necessary documents, such as KYC documents, debenture application forms, and debenture allotment letters. The CIT(A) concluded that the assessee had discharged its burden of proving the cash credits.

Conclusion:

The Tribunal upheld the CIT(A)'s decision, stating that the AO had made the addition without considering the evidence provided by the assessee and solely based on the surrender made during the survey. The Tribunal emphasized that additions cannot be made solely on the basis of statements recorded under section 133A, as they do not have conclusive evidentiary value. The Tribunal dismissed the Revenue's appeal, affirming that the assessee had satisfactorily discharged its burden of proving the cash credits under section 68.

Decision:

The appeal of the Revenue was dismissed, and the order of the CIT(A) was upheld. The decision was pronounced in the open Court on 19.09.2016.