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2020 (12) TMI 99 - AT - Income TaxAddition based upon the discrepancies brought out during the course of survey u/s 133A - admission by the director of assessee company in his statement recorded u/s 133A(3) - loose papers found during the course of survey include number of papers which are not recorded in the books of accounts and during the course of assessment proceedings, the assessee was asked to furnish the page-wise details of the loose papers found during the course of survey - HELD THAT - Disclosure so made by the director of the assessee company during the course of survey in his statement recorded u/s 133A was on an estimated basis on a prima facie review of the documents found during the course of survey and and subsequently, within a period of two and half months, the assessee on detail examination determined the figure as the figure which remain undisclosed and the same was offered to tax by way of filing the revised return of income for A.Y 2013-14 which has been accepted by the Revenue and since, there was no other material found during the course of survey pertaining to A.Y 2014-15, no amount was offered to tax in the return of income for the impugned assessment year and therefore, the strictest principles of retraction wherein the surrender in the statement so recorded is supported by corroborative evidence and subsequent retraction in absence of any fresh evidence/explanation so advanced by the ld CIT/DR are not applicable in the peculiar facts and circumstances of the present case where the statement of the director of the assessee company was recorded u/s 133A during the course of survey operations and said statement alone without any corroborating material doesn t have any independent evidential value. Addition made merely basis the statement recorded u/s 133A without any corroborating evidence cannot be sustained in the eyes of law and the ld CIT(A) has rightly appreciated the facts of the case and has followed the legal proposition so laid down by the Courts including the jurisdictional High Courts. Appeals so taken by the Revenue are dismissed. Rejection of books of accounts invoking the provisions of section 145(3) - reason why the AO has rejected the books of accounts is that the books of accounts were not found/available at the time of survey and the same have been prepared subsequently and are thus not reliable - HELD THAT - Once the books of accounts have been prepared/recasted, the AO cannot go back to the stage of survey proceedings and contend that since no books of accounts were available at that point in time, he will not consider the books of accounts so recasted/prepared and furnished subsequently. AO is well within his rights to question the results or the effect of the transactions so reflected in the books of accounts as to whether the same represents a true and fair picture and identifies the defects, if any, however, once the books of accounts have been prepared and submitted for his verification, he cannot deny the very existence of such books of accounts - rejection of books of accounts is not justified in the instant case in absence of any specific defect so pointed out by the AO - no basis has been specified for determining and making the addition of ₹ 50 lacs which, going by plain wordings of the assessment order that such addition is made on account of possible leakage of revenues, is clearly adhoc and cannot be sustained in the eyes of law. - Decided against revenue. Unaccounted advances made to various contractors - deduction being already offered in preceding assessment year - why the amount of ₹ 1,33,27,282/- should not be added back in its income as wrongly claimed in its return of income - HELD THAT - As far as nature of additional income offered by the assessee in A.Y 2013-14 is concerned, it is admittedly in the nature of advances given to the various contractors engaged by the assessee which were not recorded in the books of accounts. The question that arises for consideration is once this additional income is offered and brought to tax as an intangible addition in the hands of the assessee for the previous assessment year, can the assessee be allowed telescoping/set off of the same in the impugned assessment year. In this regard, the claim of the assessee is that such advances were made to contractors for construction work, which eventually would have formed part of cost of project, however for the reason of non incorporating of such payment in books, cost of project also remained understated to that extent. In other words, the claim of the assessee is that there are unrecorded expenditure/payments made out of such advances which also remain unaccounted for the year under consideration and therefore, the assessee should be allowed the benefit of such unaccounted expenditure out of such unaccounted advances. AO has recorded a finding that no evidence has been furnished that these advances have actually been utilized for incurring any expenditure and the claim of the assessee for set off was denied and the said finding remain uncontroverted before us. We therefore find that there is no evidence on record which can demonstrate that advances to the contractors so offered by the assessee in the previous assessment year have actually been utilized towards project expenditure in the year under consideration. Even where it is assumed that project expenditure must have been incurred out of such advances, there is no evidence on record that such project expenditure also remained unrecorded and unaccounted in the books of accounts for the year under consideration which were finalized and audited much after the date of survey - benefit of set off of such income so offered by the assessee in the previous assessment year cannot be given to the assessee for the impugned assessment year and the contentions so advanced by the ld A/R cannot be accepted. In the result, the sole ground of appeal taken by the assessee is hereby dismissed.
Issues Involved:
1. Deletion of addition of ?3,66,72,718/- based on survey findings and statement recorded under section 133A. 2. Deletion of addition of ?50,00,000/- by rejecting books of accounts under section 145(3). 3. Confirmation of addition of ?1,33,27,282/- claimed as set-off for unaccounted advances. Detailed Analysis: 1. Deletion of Addition of ?3,66,72,718/- Based on Survey Findings and Statement Recorded Under Section 133A: The Revenue challenged the deletion of the addition of ?3,66,72,718/- made based on discrepancies found during a survey under section 133A. The Assessing Officer (AO) noted that the Director of the assessee company admitted to unaccounted income during the survey, which was not included in the return of income. The AO argued that the statement made during the survey legally binds the assessee unless rebutted by evidence, and the assessee did not retract the confession. The assessee contended that statements recorded under section 133A do not have evidentiary value without corroborative evidence and that the additional income was already offered for the previous year. The Tribunal held that the statement recorded under section 133A alone cannot form the basis for addition without corroborative material. The Tribunal found that most of the loose papers pertained to the previous year, and the additional income was already offered for taxation. The Tribunal affirmed the CIT(A)'s decision to delete the addition, stating that the AO did not provide sufficient evidence to support the addition. 2. Deletion of Addition of ?50,00,000/- by Rejecting Books of Accounts Under Section 145(3): The Revenue challenged the deletion of the addition of ?50,00,000/- made by rejecting the books of accounts under section 145(3). The AO argued that no books of accounts were found during the survey, indicating that the books were created as per the assessee's will. The AO made an ad-hoc addition for possible revenue leakage. The assessee contended that the books of accounts were maintained regularly and audited by a Chartered Accountant without any adverse remarks. The books were not available during the survey due to a technical issue, but they were recasted and audited subsequently. The Tribunal held that the AO cannot reject the books of accounts solely because they were not available during the survey, especially when they were recasted and audited later. The Tribunal found no specific defects in the books of accounts and stated that the ad-hoc addition was not justified. The Tribunal affirmed the CIT(A)'s decision to delete the addition. 3. Confirmation of Addition of ?1,33,27,282/- Claimed as Set-Off for Unaccounted Advances: The assessee challenged the confirmation of the addition of ?1,33,27,282/- made by the AO. The assessee argued that the amount was already offered as additional income in the previous year for unaccounted advances given to contractors and claimed it as a deduction to avoid double taxation. The AO found no evidence that the advances were utilized for project expenses in the current year and denied the set-off. The Tribunal held that there was no evidence to demonstrate that the advances were used for unrecorded project expenses in the current year. The Tribunal stated that the benefit of set-off could not be given without evidence of utilization. The Tribunal affirmed the CIT(A)'s decision to confirm the addition. Conclusion: The Tribunal dismissed the Revenue's appeal regarding the deletion of additions based on survey findings and rejection of books of accounts. The Tribunal also dismissed the assessee's appeal regarding the confirmation of the addition claimed as set-off for unaccounted advances. The decisions were based on the lack of corroborative evidence and the proper maintenance and audit of books of accounts.
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