2010 (7) TMI 74 - HC - Income Tax

Survey u/s 133A - Surrender of income during survey - 08th March 2002 a survey operation was conducted on the assessee s business premises under Section 133A of the Act 1961. During the course of survey stock inventory trading account and inventory of cash was prepared and the statement of assessee was recorded. On the basis of assessee s admission the assessing officer made addition of Rs.10, 83, 540/- to the income declared. The addition consisted of Rs.7, 03, 540/- on account of excess stock Rs.2, 75, 000/- on account of showroom renovation and Rs.1, 05, 000/- on account of excess cash found. - immediately thereafter on 13th March 2002 assessee withdrew the admission and stated that there was neither excess cash nor stock or expense incurred on renovation. Held that - assessee had filed books of accounts along with necessary supporting evidence like sale/purchase bills cash books and ledger etc. - books result have been rejected by the assessing officer on the sole reason that the purchase bills had not been produced; even though as per letters dated 13th March 2002 and 22nd January 2003 the purchase bills had been filed - In the present case the assessee has duly supported his retraction with the book results by filing necessary evidence. no addition to be made

Summary

Issues:
1. Condonation of delay in re-filing the appeal.
2. Challenge to the order of the Income Tax Appellate Tribunal (ITAT) under Section 260A of the Income Tax Act, 1961.
3. Addition of Rs.10,83,540/- to the income declared by the assessing officer.
4. Validity of the assessee's retraction of admission made during survey.
5. Consideration of book results and supporting evidence in assessing income.

Analysis:
1. The judgment begins with an application for condonation of delay of 76 days in re-filing the appeal, which is granted by the court based on the reasons stated in the application. The application is disposed of accordingly.

2. The appeal under Section 260A of the Income Tax Act, 1961 challenges the order dated 30th April, 2009 passed by the ITAT in ITA 4246/Del/2005. The appellant argues that both the ITAT and the Commissioner of Income Tax (Appeals) erred in law by deleting the addition of Rs.10,83,540/- made by the assessing officer on account of surrender during a survey under Section 133A of the Act.

3. During a survey conducted on the assessee's business premises, the assessing officer made the addition to the declared income based on the assessee's admission. However, the assessee later retracted the admission, denying the existence of excess stock, cash, or expenses on renovation. The CIT(A) and ITAT found that the assessing officer's rejection of the book results was unjustified as the necessary supporting evidence had been provided by the assessee.

4. The court emphasized that an assessee is entitled to explain their admission, and in this case, the assessee supported the retraction with book results and evidence. Since there was no finding that the book results were unreliable or that any investment was made in showroom renovation, the court held that no substantial question of law arose in the appeal.

5. Consequently, the appeal was dismissed in limine with no order as to costs. The judgment was delivered by Justice Manmohan and the Chief Justice on July 16, 2010.