2018 (6) TMI 1182 - AT - Income Tax

Addition made on account of undisclosed purchase - Held that - An admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the person who made the admission to show that it is incorrect. SEE PULLANGODE RUBBER AND PRODUCE COMPANY LIMITED VERSUS STATE OF KERALA AND ANOTHER 1971 (9) TMI 64 - SUPREME COURT Both in the post survey proceedings and scrutiny assessment proceedings, detailed explanations were submitted by the assessee which was supported by proper evidences and documents to establish why the statement made at the time of survey is not being adhered to - the assessee in the assessment proceedings intimated to the ld AO what are the correct facts and filed evidences in support of its claim. The assessee had supported its contentions based on the entries in the regular books of accouns that were duly audited and submitted before the ld AO - AO categorically agrees that the said books of accounts were examined by him in the assessment proceedings and no adverse remarks were passed on the same by him in his order. The books of accounts submitted by the assessee were not rejected by the ld AO - DR could not produce any contrary evidence on record to prove that the addition has been made other than placing reliance on statement recorded from the partner - Addition to be deleted - Decided against revenue

Summary

Issues:
- Whether the Commissioner of Income Tax (Appeals) was justified in deleting the addition made on account of undisclosed purchase of ?57,34,905.

Analysis:
1. The appeal by the Revenue concerned the deletion of an addition made based on a survey conducted on a partnership firm engaged in book trading for the Assessment Year 2011-12.
2. The only issue was whether the Commissioner of Income Tax (Appeals) was correct in deleting the addition of ?57,34,905 due to undisclosed purchases.
3. During the survey, a discrepancy of ?57,34,905 in stock was found, and the partner of the firm admitted to the mistake due to unrecorded local purchases. The Assessing Officer (AO) added this amount to the total income based on the partner's statement.
4. The firm argued that the survey team's figures were inaccurate and the partner's statement was made under duress. They provided evidence contradicting the survey team's findings and the reliability of the partner's statement.
5. The Commissioner observed that the addition was solely based on the partner's statement without corroborative evidence. The firm submitted detailed explanations and evidence during assessment proceedings, which the AO did not reject. Consequently, the Commissioner deleted the addition.
6. The Tribunal upheld the Commissioner's decision, noting the lack of contrary evidence from the Revenue. They cited a Madras High Court decision emphasizing that an admission is not conclusive evidence and the material from a survey is not conclusive for making additions.
7. Based on the findings and previous decisions, the Tribunal dismissed the Revenue's appeal, upholding the deletion of the addition.

This detailed analysis highlights the procedural and evidentiary aspects of the case, emphasizing the importance of corroborative evidence and the limitations of statements made during surveys in tax assessments.