2009 (7) TMI 96 - HC - Income Tax

Survey Surrender of Income Section 133A - A survey was conducted under section 133A of the Act on December 4, 2003, at the premises of the assessee. In pursuance thereof, the assessee made surrender with condition that there will be no penalty or prosecution. It has been found by the CIT(A) as well as ITAT that the surrender was accepted. However, the AO added taxable income over and above the surrendered amount, which was deleted by the CIT(A) as well as by ITAT held that - We are unable to hold that any substantial question of law arises. There is a concurrent finding of fact that the Department had accepted the surrendered income and if the finding is against the record, the remedy of the appellant is to apply for rectification and not by way of this appeal revenue appeal dismissed

Summary

Issues:
1. Obligation of the Department to accept surrender income not based on survey documents.
2. Justification of the Income-tax Appellate Tribunal's decision on unrecorded sales issue.

Analysis:

Issue 1:
The appeal before the High Court revolved around the Department's obligation to accept surrender income not supported by survey documents. The Revenue appealed against the Income-tax Appellate Tribunal's decision regarding the addition of taxable income beyond the surrendered amount. The Tribunal and the Commissioner of Income-tax (Appeals) acknowledged the acceptance of the surrender made by the assessee during a survey conducted under section 133A of the Income-tax Act, 1961. However, the Assessing Officer had added taxable income over the surrendered amount, a decision later overturned by the Commissioner of Income-tax (Appeals) and the Tribunal. The appellant contended that there was no acceptance of the surrender, contrary to the findings of the lower authorities. The High Court, after hearing the arguments, held that no substantial question of law arose in this regard. The Court emphasized the concurrent finding that the Department had indeed accepted the surrendered income. It was clarified that if there were issues with the findings, the appropriate recourse for the appellant would be to seek rectification rather than filing an appeal.

Issue 2:
The second substantial question of law raised in the appeal pertained to the Income-tax Appellate Tribunal's decision concerning unrecorded sales. The appellant questioned the Tribunal's failure to provide a finding on the issue of unrecorded sales, especially considering the Commissioner of Income-tax (Appeals) had not elaborated on this matter in their order. The discrepancy highlighted was how the returned income of Rs. 2,18,162 could cover the profit and initial investment of unrecorded sales amounting to Rs. 38,36,534. Despite this contention, the High Court did not find merit in this argument and dismissed the appeal. The Court did not delve into the specifics of the unrecorded sales issue as it did not consider it a substantial question of law.

In conclusion, the High Court upheld the decisions of the lower authorities, emphasizing the acceptance of the surrendered income by the Department and dismissing the appeal based on the absence of substantial legal questions.