2021 (12) TMI 937 - AT - Income Tax

Determining total income of the assessee - survey under section 133A - evidentiary value of statement made at the time of survey - assessee did not maintain any books of accounts - addition based on declaration made at the time of survey - HELD THAT - The statement alone without substantiating material cannot be the basis to make any addition but in the present case, the circumstances under which the statement was made and declaration of income at the time of survey have also to be seen viz., the assessee admitted receiving receipts from producers in cash which are not recorded in the books of accounts, evidence found in the course of survey showing that the assessee had made cash payments for construction of house which are not appearing in the books of account and admission of the assessee that he earned income which was not disclosed in the books of accounts. The period after 17.8.2011 is concerned, the proportionate income declared by the assessee would be 198 days/ 365 days x 15,35,527/-, which would be a sum of ₹ 8,32,970/- (approx.). In my view it would be just and appropriate and fair to assess the total income of the assessee at a sum of ₹ 18.77 lacs ₹ 8,32,970, i.e., at a sum of ₹ 27,09,970 ₹ 1,13,347 being Chapter VI A deduction, i.e., a sum of ₹ 25,96,623/- as against the total income returned of ₹ 14,22,180/-. - Decided partly in favour of assessee.

Issues Involved:
1. Whether the Revenue authorities were justified in determining the total income of the assessee at ?50 lakhs as against ?14,22,180/- declared by the assessee.
2. Whether the statement made by the assessee during the survey under section 133A has evidentiary value.
3. Whether the addition to the income can be sustained solely based on the statement made during the survey.
4. Whether the assessee's claim that the statement was made under coercion and undue influence is valid.
5. Whether the CIT(A) was correct in confirming the levy of interest under sections 234B and 234C.

Detailed Analysis:

1. Justification of Income Determination:
The primary issue revolves around whether the Revenue authorities were justified in determining the total income of the assessee at ?50 lakhs, significantly higher than the ?14,22,180/- declared by the assessee for the Assessment Year (AY) 2012-13. The assessee, a music director, was subjected to a survey under section 133A of the Income Tax Act, 1961, during which he admitted to receiving unaccounted cash from producers and making cash payments for house construction not recorded in the books of accounts. The Assessing Officer (AO) determined the total income based on the statement recorded during the survey, which the assessee later contested.

2. Evidentiary Value of the Statement:
The Tribunal examined the statement recorded during the survey, noting that the assessee admitted to receiving unaccounted cash and making unrecorded cash payments for house construction. The assessee argued that the statement made during the survey has no evidentiary value, citing several judicial precedents and CBDT Circulars emphasizing the need for credible evidence over confessions. The Tribunal referenced decisions such as Pullangode Rubber Produce Co. Ltd. vs. State of Kerala (1973) 91 ITR 18 and CIT v Dhingra Metal Works (2010) 328 ITR 384, which state that admissions are important but not conclusive and can be contested.

3. Sustaining Addition Based on the Survey Statement:
The Tribunal acknowledged that the AO's determination of the total income at ?50 lakhs was solely based on the statement made during the survey without any corroborating material evidence. The Tribunal highlighted that the statement alone cannot be the basis for addition unless supported by material evidence, as established in cases like Paul Mathews and Sons V CIT (2003) 129 Taxman 416 and CIT v S. Khader Khan Sons 300 ITR 157.

4. Validity of Coercion and Undue Influence Claim:
The assessee claimed that the statement was made under coercion and undue influence, which the CIT(A) dismissed due to lack of evidence. The Tribunal noted that the assessee honored the statement for AY 2011-12 but not for AY 2012-13, raising questions about the consistency of the coercion claim. The Tribunal found that the assessee's explanation for not declaring the income for AY 2012-13 was unconvincing.

5. Levy of Interest under Sections 234B and 234C:
The CIT(A) confirmed the levy of interest under sections 234B and 234C, which the assessee contested. However, the Tribunal did not specifically address this issue in detail, focusing instead on the primary issue of income determination.

Conclusion:
The Tribunal concluded that the total income for AY 2012-13 should be assessed at ?25,96,623/- instead of ?50 lakhs, considering the proportionate income for the period up to 17.08.2011 and the lack of incriminating material for the period after. The Tribunal partly allowed the appeal of the assessee, balancing the evidentiary value of the statement and the factual circumstances of the case. The Tribunal's decision reflects a nuanced approach, recognizing the importance of credible evidence while also considering the practical aspects of the case.

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