2015 (2) TMI 210 - HC - Income Tax

Addition to income - Tribunal held that the disclosure made by the assessee was not over and above the income declared in its books of accounts despite the fact that this amount was disclosed by the assessee during the survey - statement recorded u/s. 133A is deemed to be statement recorded u/s 131(1) - Held that - As per the Tribunal the Revenue has not brought any material on record to demonstrate that the additional of ₹ 35,00,000/- made by the A.O., is taxed by any tangible material apart from the statement recorded during the course of survey. The statement made is considered by the Tribunal and upon appreciation of evidence of the statement if the Tribunal has found that the Assessee admitted the income tax of ₹ 35,00,000/- for the respective year and the Tribunal did not find that it was in addition to the income already declared, such aspect would fall in the arena of finding of fact, which would be beyond the scope of Second Appeal. Attempt was made by the learned Counsel for the Revenue to contend that the statement made can be interpreted to mean the income declared of ₹ 35,00,000/- in addition to the normal income to which we find that the same cannot be accepted, because we have not found any perversity in the finding of fact by the Tribunal for treating the income of the Assessee at ₹ 35,00,000/-. In any event, when there is no perversity in the finding of fact, this Court in exercise of the power in Second Appeal would substitute another finding of fact as sought to be canvassed. - Decided against revenue.

Summary

Issues:
1. Interpretation of income disclosure during survey
2. Applicability of statement recorded during survey
3. Scope of Second Appeal in tax matters

Analysis:

Issue 1: Interpretation of income disclosure during survey
The appeal raised substantial questions of law regarding the interpretation of the income disclosure made by the assessee during a survey. The Appellate Tribunal had to determine if the disclosed amount was over and above the income declared in the books of accounts. The Tribunal observed that the assessee had admitted to an income of Rs. 35,00,000 during the survey, but in the income tax return, only Rs. 32,49,328 was offered for taxation. The Tribunal found that the addition of Rs. 35,00,000 by the Assessing Officer lacked tangible material apart from the survey statement. Consequently, the Tribunal restricted the addition to Rs. 2,50,672, the shortfall amount admitted during the survey. The Tribunal's decision was based on the absence of additional evidence supporting the full addition, leading to the partial allowance of the appeal.

Issue 2: Applicability of statement recorded during survey
The Tribunal emphasized that the statement recorded during the survey held evidentiary value, especially when the taxes related to the disclosure were paid, and the statement was not retracted till the filing of the return. The Tribunal's decision was based on the lack of material demonstrating the necessity of the full addition of Rs. 35,00,000, as the revenue failed to provide additional tangible evidence beyond the survey statement. The Tribunal's analysis focused on the factual findings and the admission of the differential amount by the assessee, indicating that the addition should be limited to the shortfall amount acknowledged during the survey and declared in the income tax return.

Issue 3: Scope of Second Appeal in tax matters
The High Court considered the scope of Second Appeal in tax matters and highlighted that the appeal was primarily centered on questions of fact rather than questions of law. The Court noted that the Tribunal's decision was based on factual findings regarding the income disclosure and the lack of substantial evidence supporting the full addition of Rs. 35,00,000. As the appeal lacked substantial questions of law and was primarily factual in nature, the Court found no grounds for interference with the Tribunal's order. Consequently, the Court dismissed the appeal, deeming it meritless due to the absence of substantial legal issues warranting intervention.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing the importance of factual findings, the evidentiary value of statements recorded during surveys, and the limited scope of Second Appeal in tax matters primarily based on questions of fact.