2018 (3) TMI 1314 - AT - Income Tax

Addition u/s 69 - excess weight of gold ornaments as undisclosed investment - evidentiary value of statement elicited during the survey operation - Held that - Section 133A enables the IT authority only to record any statement of any person which may be useful, but does not authorize for taking any sworn in statement. The IT Act, whenever it thought fit and necessary to confer such power to examine a person on oath, the same has been expressly provided whereas section 133A does not empower any ITO to examine any person on oath. Thus, in contra distinction, to the power under section 133A, section 132(4) enables the authorized officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the IT Act. Whatever statement recorded under section 133A is not given any evidentiary value obviously for the reason that the officer is not authorized to administer oath and to take any sworn statement which alone has the evidentiary value as contemplated under law. Therefore, there is much force in the argument of the counsel for the appellant that the statement, elicited during the survey operation has no evidentiary value. We are of the view that there is no infirmity in the order passed by the ld. CIT(A). That being so, we decline to interfere in the order passed by the ld. CIT(A), his order on this issue is hereby upheld and the grounds of appeal raised by the Revenue is dismissed.

Summary

Issues:
- Appeal against deletion of addition made under section 69 of the Income Tax Act, 1961 for excess weight of gold ornaments found during survey.
- Discrepancy in weight of gold ornaments found during survey and explanation provided by the assessee.
- Validity of assessing officer's decision to treat unaccounted gold ornaments as undisclosed investment.

Analysis:

Issue 1: Appeal against deletion of addition under section 69
The appeal filed by the Revenue challenged the deletion of addition of ?42,39,945 made under section 69 of the Income Tax Act, 1961, for excess weight of gold ornaments found during a survey. The assessing officer had treated the balance of 2166 grams of gold ornaments as undisclosed investment and added it to the total income of the assessee. However, the Commissioner of Income Tax (Appeals) deleted this addition based on the explanation provided by the assessee regarding the stock discrepancy.

Issue 2: Discrepancy in weight of gold ornaments
The assessee explained that the difference in stock of 2166 grams of gold was due to the gold being issued to karigars on 13.01.2011 and returned back on 20.01.2011, but not entered in the GS-12 register due to it being impounded by the Department during the survey. The assessing officer rejected this explanation, stating that no karigar would surrender costly items without proper receipts. However, the Commissioner noted that the assessing officer did not provide evidence to refute the return of the gold and the non-entry in the register.

Issue 3: Validity of assessing officer's decision
The assessing officer's decision to treat the unaccounted gold ornaments as undisclosed investment was based on the assumption that the gold issued to karigars was part of the stock reflected in the books. However, the Tribunal found that the assessing officer failed to consider the impounding of the GS-12 register during the survey, which prevented the immediate entry of the returned gold. The Tribunal also highlighted the incorrect valuation of stock by the assessing officer, who used market price instead of cost price. Additionally, the Tribunal emphasized that the statement taken on oath during the survey did not have evidentiary value and was in violation of the provisions of section 133A of the Act. Ultimately, the Tribunal upheld the decision of the Commissioner to delete the addition, as there was no infirmity in the order passed by the Commissioner.

In conclusion, the Tribunal dismissed the appeal filed by the Revenue, upholding the decision of the Commissioner to delete the addition made under section 69 of the Income Tax Act for the excess weight of gold ornaments found during the survey.