2021 (4) TMI 529 - AT - Income Tax

Unaccounted income disclosed during the course of survey - survey action conducted u/s 133A on the business premises of assessee wherein incriminating documents were found in possession of partners of assessee firm - statement of one of the partner of assessee firm as recorded on oath disclosed unaccounted income as net income for assessment year (AY) 2012-13 - partner of assessed also furnished the bifurcation of unaccounted income - primary contention of the assessee that the partners of the assessee made statement of gross business receivable, CIT(A) held that while making statement in the survey proceeding the partners specifically stated that the amount is distributed among the partners are unrecorded and unaccounted receivables of the firm - HELD THAT - There is no dispute that during the survey action on 05.07.2011, the partner of the assessee declared additional undisclosed income - It was also stated in the statement that it is the net income of assessee and that no expenses against the said undisclosed income would be claimed. There is no dispute about the legal position that the survey team has no authority to record the statement of person on oath, meaning thereby the statement recorded during survey is per se not admissible in the evidence. In the present case, not only one partner of the assessee made discloser of additional undisclosed income, but it was endorsed by two other partners in presence of their CA. The statement was acted upon by making the payment of tax of ₹ 2.10 Crore till 29.03.2012, on such undisclosed income. During first appellate stage the assessee try to introduce new facts that the undisclosed additional income was earned from the business of sarees and dress material for which no separate accounts were maintained. Before, Tribunal the assessee has filed Audit report, as duly signed by learned CA, who was present during the survey action and endorsed the statement of the partner of assessee. In para 8(a) of the Audit report the assessee/auditor has shown its business of Land Building Development , in para 8(b) which relates to change in the business or profession the assessee has written N.A. - in Audit report it is reported that the books of accounts are maintained in computer system. Now again adverting to the stands taken by the assessee; before survey team the partner of the assessee disclosed additional income of ₹ 10.78 Crore, the assessee paid tax of ₹ 2.10 Crore till 29.03.2013, which shows the conduct of the assessee that the stamen made during the survey action was acted upon. At the time of filing return of income declared income of ₹ 4.00 Crore. The assessee retracted from the statement of the partner after more than two years. No reasonable and plausible explanation in retracting the statement was offered except simply stating that they realised their mistake later on. If the mistake was realised later on the statement should have been retracted immediately. In the retraction affidavit the partners of the assessee has no where stated that there was any pressure or any coercive measure was used against them while recording the statement. Before Ld. CIT(A), the assessee raised another story of business of sarees and dress material, which was not substantiated. Thus, the additional plea of the assessee was not allowed. Strangely, again the decision of Ld. CIT(A) in not accepting the additional plea no grounds of appeal was raised before this Tribunal. The aforesaid distinctive plea raised by the assessee does not inspire confidence. In view of the aforesaid discussions, we do not find merit in the grounds of appeal raised by the assessee. Appeal of the assessee is dismissed.

Issues Involved:
1. Confirmation of addition of ?6,78,00,000/- to the total income of the assessee.
2. Reliance on statements made during the survey under section 133A.
3. Rejection of additional evidence produced by the assessee.
4. Determination of whether the disclosed income was gross receipts or net income.

Issue-wise Detailed Analysis:

1. Confirmation of Addition of ?6,78,00,000/-:
The assessee, a partnership firm engaged in land and building development, was subjected to a survey on 05.07.2011 under section 133A, during which incriminating documents were found. The partner disclosed an unaccounted income of ?10.78 Crore as net income for AY 2012-13. However, the assessee filed a return declaring ?4.00 Crore as taxable income. The Assessing Officer (AO) added the difference of ?6,78,00,000/- to the total income, citing the lack of documentary evidence for expenses incurred to arrive at the net income. The AO treated the retraction as an afterthought and added the differential amount to the total income.

2. Reliance on Statements Made During the Survey:
The AO and CIT(A) relied heavily on the statements recorded during the survey, where the partner disclosed unaccounted income and affirmed that no expenses or deductions would be claimed. The CIT(A) upheld the addition, noting that the statement was made in the presence of a Chartered Accountant and other partners, and no immediate retraction was made. The Tribunal noted that the statement was acted upon by paying advance tax of ?2.10 Crore, indicating the acceptance of the disclosed income.

3. Rejection of Additional Evidence:
The assessee's attempt to introduce new claims during the appellate stage, such as the income being from trading sarees and dress material, was rejected by the CIT(A) as a 'make-believe story'. The CIT(A) noted that no such claim was made during the survey, assessment, or in the retraction affidavit. The Tribunal agreed with the CIT(A) that the additional grounds raised were inconsistent and unsupported by evidence.

4. Determination of Gross Receipts vs. Net Income:
The assessee argued that the disclosed amount was gross receipts, not net income, and that only net income should be taxed. The Tribunal acknowledged that only net income is taxable but emphasized that the assessee failed to provide evidence of expenses incurred to earn the disclosed income. The Tribunal noted that the retraction was made after two years without a plausible explanation and was not supported by any evidence of pressure or coercion during the statement recording.

Conclusion:
The Tribunal dismissed the appeal, agreeing with the lower authorities that the assessee's inconsistent statements and lack of evidence did not support the claim that the disclosed amount was gross receipts. The addition of ?6,78,00,000/- to the total income was upheld, and the retraction was deemed an afterthought. The Tribunal emphasized the importance of immediate retraction and credible evidence to support claims of expenses against undisclosed income.

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