2020 (1) TMI 1021 - AT - Income Tax

Addition on the basis of the survey carried out at the premises of the assessee - Assessee made the surrender of income - HELD THAT - The entire addition is based on the surrender on the basis of a letter dated 24.03.2012 which stand retracted by letter dated 30.03.2012 and 02.07.2012. Moreover, this surrender is not under oath. The AO has not brought any material to rebut the explanation of the assessee. Further, the issue is also covered by the judgment of the Hon ble Supreme Court in the case of CIT vs. Khader Khan Son 2013 (6) TMI 305 - SC ORDER wherein the Court has held that section 133A of the Act does not empower any Income Tax Authority to examine any person on oath and therefore any admission made in a statement recorded during survey cannot by itself be made the basis of addition - the addition in dispute made by the AO and confirmed by the Ld. CIT(A) is not tenable in the eyes of law, hence, the same is deleted. - Decided in favour of assessee.

Summary

Issues:
1. Addition of surrendered cash during survey
2. Addition of surrendered stock during survey
3. Addition of expenditure on renovation and building
4. Addition of unaccounted wages
5. Adhoc disallowance of expenses
6. Retraction of statement by the assessee

Addition of Surrendered Cash During Survey:
The appeal challenged the addition of ?9,70,640 made by the Assessing Officer (AO) on account of cash surrendered during a survey. The assessee retracted the statement without providing supporting documents. However, the Tribunal noted discrepancies in the AO's claim, highlighting that no excess cash was actually found. The assessee explained that the declaration was made under pressure, and the AO failed to provide evidence supporting the addition. Citing a Supreme Court judgment, the Tribunal ruled in favor of the assessee, deleting the addition.

Addition of Surrendered Stock During Survey:
The AO added ?31,80,470 for surrendered stock during the survey. The Tribunal found that the assessee had provided detailed explanations and supporting documents to refute the AO's claim. The Tribunal noted that the AO's reliance on the retracted statement was unfounded and ruled in favor of the assessee, deleting the addition.

Addition of Expenditure on Renovation and Building:
An amount of ?18,98,000 was added by the AO for renovation and building expenditure. The assessee presented detailed submissions and evidence to counter this addition. The Tribunal observed that the AO failed to substantiate the allegation with concrete evidence. Relying on the assessee's explanations and legal precedent, the Tribunal ruled in favor of the assessee, deleting the addition.

Addition of Unaccounted Wages:
The AO added ?14,49,550 for unaccounted wages. The assessee provided detailed explanations and supporting evidence to challenge this addition. The Tribunal found the AO's reasoning lacking in evidence and upheld the assessee's contentions. Relying on the detailed submissions and legal principles, the Tribunal deleted the addition.

Adhoc Disallowance of Expenses:
An adhoc disallowance of ?60,000 was made by the AO on various expenses. The Tribunal reviewed the submissions and evidence provided by the assessee, finding the AO's reasoning inadequate. Consequently, the Tribunal ruled in favor of the assessee, deleting the adhoc disallowance.

Retraction of Statement by the Assessee:
The assessee retracted the surrender statement made during the survey, citing coercion and lack of supporting documents. The Tribunal considered the sequence of events, detailed submissions, and legal precedent. Finding the retraction valid and the AO's actions lacking in evidence, the Tribunal allowed the appeal, deleting all disputed additions.

This detailed analysis of the judgment highlights the issues raised, the arguments presented by both parties, and the Tribunal's reasoning for ruling in favor of the assessee and deleting the disputed additions.