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2024 (4) TMI 138 - AT - Income TaxAddition u/s 68 - disclosure made by the assessee on the basis of documents impounded during the course of survey proceedings - HELD THAT - First of all we note that the statement on oath is not permitted during Survey proceedings, for that reliance is placed on the judgment of Hon ble High Court of Kerala in the case of PAUL MATHEWS SONS 2003 (2) TMI 25 - KERALA HIGH COURT We note that in the assessee's case under consideration, during the course of survey action u/s 133A of the I.T. Act, 1961, the statement of the assessee was recorded u/s 131 (1A) of the I.T. Act, 1961 on oath on 05.03.2014, which is against the provisions of law. Besides, the statement taken during Survey has no evidential value without any corroborative evidence and for this reliance is placed on the judgment of Hon ble High Court of Madras, in the case of S. Khader Khan Son, 2007 (7) TMI 182 - MADRAS HIGH COURT (Madras), wherein the Hon ble Court held that section 133A does not empower any ITO to examine any person on oath; so statement recorded under section 133A has no evidentiary value and any admission made during such statement cannot be made basis of addition. We note that in assessee's case under consideration, the addition was made by the assessing officer based on the statement only, which is not permitted. Therefore, we note that during the survey proceedings no any incriminating material or tangible material was found by survey team in respect of addition made and it is settled position of law that statement on oath taken during Survey has no evidential value without any corroborative evidence. AO did not bring on record any corroborative evidence to make addition except statement of assessee. Moreover, the assessee, vide his letter during the assessment proceedings had requested the assessing officer to furnish him the incrimination material/corroborative evidences found during survey, by the survey team, in respect of addition which the assessing officer failed to provide to the assessee, and made the addition without corroborative evidences, which is not sustainable in the eye of law. We also note that during the assessment proceedings the assessee stated in the written submission that By not offering Rs. 2,50,00,000/- in the Return of Income, the assessee has in a way retracted his statement , thus, we note that assessee has not accepted the statement recorded on oath during survey and rather it was retracted by him. Based on these facts and circumstances, we delete the addition. Returned loss - As we find merit in the submission of Ld.CIT-DR to the effect that since the assessee has failed to furnish any explanation before the assessing officer, was well as before the ld CIT(A) therefore, we remit this issue back to the file of the assessing officer with the direction to the assessee to furnish explanation/justification of business loss before the assessing officer and then assessing officer should adjudicate the issue in accordance with law. Penalty u/s 271F - assessee did not file the return of income as per due date prescribed u/s 139(1) - As submitted assessee has furnished the belated return of income u/s 139(4) - HELD THAT - As Act permits the assessee to file the belated return of income, in case he did not file original return of income u/s 139(1) of the Act, and the assessee has made sufficient compliance by filing belated return. Section 271F deals with the penalty for failure to furnish return of income. If an assessing officer has imposed a penalty under this section, it is possible for the penalty to be deleted or waived if sufficient cause is shown by the assessee. According to the assessee, there was a business loss hence assessee did have positive income, therefore assessee decided not to file the original return of income u/s 139 and this is the sufficient cause not to file the original return of income within the time prescribed under section 139(1). Therefore, assessee filed the belated return of income under section 139(4) - We note that the assessee has explained the sufficient cause or reason, not to leave the penalty u/s 271F therefore, we delete the penalty imposed u/s 271F of the Act. Assessment u/s 144 - assessee did not file the required details and documents before AO - On appeal, the ld. CIT(A) passed the ex-parte order on merit based on the material available on record - HELD THAT - AO has issued notices, however assessee could not appear. Before CIT (A), the assessee could not appear because the notices for hearings were not delivered to the assessee. Considering the above facts, we note that assessee could not plead his case successfully before the ld. CIT(A). We also note that Ld. CIT(A) has not passed the order as per the mandate of provisions of section 250(6) - CIT(A) did not pass order on merit based on the material available on record and based on assessee s reply. Hence, we are of the view that one more opportunity should be given to the assessee to plead his case before the AO. We note that it is settled law that principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being heard to contest his case. Therefore, without delving much deeper into the merits of the case, in the interest of justice, we restore the matter back to the file of Assessing Officer for de novo adjudication and pass a speaking order after affording sufficient opportunity of being heard to the assessee, who in turn, is also directed to contest his stand forthwith. Assessee ground of appeal allowed for statistical purposes.
Issues Involved:
1. Addition of Rs. 6,47,417/- as business loss. 2. Addition of Rs. 2,50,00,000/- as deemed income u/s 68. 3. Penalty of Rs. 5,000/- u/s 271F for AY 2015-16. 4. Assessment framed u/s 144 for AY 2015-16. 5. Penalty of Rs. 20,000/- u/s 271(1)(b) for AY 2015-16. 6. Assessment framed u/s 144 for AY 2017-18. Summary: 1. Addition of Rs. 6,47,417/- as Business Loss: The assessee's appeal regarding the addition of Rs. 6,47,417/- as business loss was remitted back to the Assessing Officer. The Tribunal directed the assessee to furnish an explanation/justification of the business loss before the Assessing Officer, who should then adjudicate the issue in accordance with the law. 2. Addition of Rs. 2,50,00,000/- as Deemed Income u/s 68: The Tribunal deleted the addition of Rs. 2,50,00,000/- made by the Assessing Officer based on the statement taken during the survey proceedings. The Tribunal noted that no incriminating material or tangible evidence was found during the survey to support the addition. It was held that statements on oath taken during surveys have no evidential value without corroborative evidence, as per the judgments in Paul Mathews & Sons v. CIT-263 ITR 101 (Ker)(HC) and CIT v. S. Khader Khan Son - 300 ITR 157 (Mad)(HC). The assessee had also retracted the statement by not offering the amount in the Return of Income. 3. Penalty of Rs. 5,000/- u/s 271F for AY 2015-16: The Tribunal deleted the penalty of Rs. 5,000/- imposed u/s 271F for failure to furnish the return of income within the due date prescribed u/s 139(1). The assessee had filed a belated return u/s 139(4) and explained the sufficient cause for the delay, which the Tribunal accepted. 4. Assessment Framed u/s 144 for AY 2015-16: The Tribunal remitted the case back to the Assessing Officer for de novo adjudication. The assessee did not file the required details and documents before the Assessing Officer, and the CIT(A) passed an ex-parte order on merit based on the material available on record. The Tribunal directed the Assessing Officer to provide a sufficient opportunity for the assessee to present his case. 5. Penalty of Rs. 20,000/- u/s 271(1)(b) for AY 2015-16: The Tribunal remitted the case back to the Assessing Officer. The penalty was imposed for non-compliance with notices, and the CIT(A) confirmed the penalty ex-parte. The Tribunal directed the Assessing Officer to provide a sufficient opportunity for the assessee to present his case. 6. Assessment Framed u/s 144 for AY 2017-18: The Tribunal remitted the case back to the Assessing Officer. The assessee had not filed the return of income u/s 139(1) or in response to the notice u/s 148. The CIT(A) decided the appeal ex-parte based on the material available on record. The Tribunal directed the Assessing Officer to provide a sufficient opportunity for the assessee to present his case. Conclusion: - ITA No. 809/SRT/2023 is partly allowed. - ITA No. 798/SRT/2023 is allowed. - ITA Nos. 799/SRT/2023, 800/SRT/2023, and 810/SRT/2023 are allowed for statistical purposes.
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