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TMI Blog2004 (7) TMI 295X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of Rs. 50,000 net profit had been shown at Rs. 1,04,541. In the instant case, survey under s. 133A was carried out at the business premises of the assessee on 20th July, 1995. During the course of survey, the assessee was confronted with the copies of challans/bills numbering 68 out of which 29 pertained to the year under consideration, for the material purchased by the assessee Prop. M/s Rohit Fasteners from M/s Chandigarh Steel Products, Chandigarh. The said challans were seized from the premises of Chandigarh Steel Products, Chandigarh, during the course of search operation. The AO mentioned that the purchases recorded in the challans were not found entered in the books of account. The assessee agreed to make disclosure of Rs. 5 lakhs for the year relevant to assessment year under consideration. The AO, therefore, vide questionnaire dt. 9th Nov., 1998 asked the assessee to explain as to why the difference of Rs. 4,50,000 (Rs. 5 lakhs - Rs. 50,000) in the surrendered amount may not be added in his income. In response to that question, the assessee replied vide letter dt. 16th Nov., 1998 in the following words: "During the course of survey under s. 133A, the ADI had herself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods was Rs. 4,72,914 and according to the AO, the assessee must have earned GP @ 12.40 per cent which worked out to Rs. 58,641. Thus, the total investment and profit was worked out at Rs. 5,31,555. Against that, the assessee had made disclosure of Rs. 5 lakhs; this was the observation of the AO. The AO further pointed out that the assessee had surrendered Rs. 50,000 in his return of income. He, therefore, added the balance amount of Rs. 4.50 lakhs to the income of the assessee. 4. The assessee carried the matter to the learned CIT(A) who, by following her earlier order for the asst. yr. 1995-96, sustained the addition of Rs. 8,641 by observing that the AO had worked out the profit on the purchases outside the books of account at Rs. 58,641 and the assessee had already surrendered a sum of Rs. 50,000 in the return and thus relief of Rs. 4,41,359 was granted to the assessee. Now the Department is in appeal. 5. During the course of hearing, this was the common contention of both the parties that a similar issue was the subject-matter of the Departmental appeal in ITA No. 289/Chd/1999 for the asst. yr. 1995-96 in assessee's own case and the facts of the present case are identic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time of survey recorded by the ADI. While filling the return for the asst. yr. 1995-96, the assessee declared net taxable income at Rs. 58,440 and also declared a sum of Rs. 1 lakh as the amount surrendered by the assessee. 2.8 In his explanation before the AO, as to why the assessee offered a surrender of Rs. 1 lakh in his return and accounted for the same in the P L a/c, when he had made a surrender of Rs. 5 lakhs voluntarily before the ADI at the time of survey under s. 133 of the Act, the assessee said that he was an illiterate person and did not read the statement, recorded by the ADI but was forced to put his signatures falling which dire consequences would be taken against him. He had also brought this fact to the notice of the higher authorities but to no avail. Now in this background, we proceed to dispose of the issue. The simple question required to be answered is whether the explanation of the assessee is creditworthy or not. It is important to mention here that in his statement recorded at the time of survey, the assessee put his signatures in English and even from the signatures, it cannot be presumed that the signatures were of an illiterate person. The assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urrender has been made by the assessee when unrecorded purchases were detected by the ADI at the time of survey and so it is an afterthought and it cannot be called a genuine transaction. 2.12 We have also considered the case law which does not apply to the above discussed facts of the case of the assessee. However, the principles laid in these citations have applied by us before reaching the above conclusion. We have also gone through the order of the CIT(A) wherein on the basis of hypothetical assumptions, she concluded that the assessee was uneducated and illiterate person and had no knowledge of English and he signed a surrender of Rs. 5 lakhs recorded by the ADI presuming the same to be a surrender of Rs. 50,000, which amount was sufficient to cover the unaccounted purchases as he was a small dealer and his total turnover was never more than Rs. 15 lakhs and also that he was living in a small house and could not have had the capacity to earn income of Rs. 5 lakhs and hence, the assessee being a small businessman, a surrender of Rs. 5 lakhs was beyond his resources ignoring the fact that the assessee signed in English and did not controvert the observations of the AO that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... till suggests that the assessee's purchases were more than Rs. 2 lakhs during one month from only one party i.e. Chandigarh Steel Products. 2.14 Therefore, we find no force as well as justification in the order of the CIT(A) while observing that since the assessee's turn over was not more than Rs. 15 lakhs, therefore, he could not be doubted to have earned an income of Rs. 5 lakhs during the year. Since the above facts and circumstances duly pointed out by the AO suggest that the assessee was in regular practice to make purchases outside the books which reasonably implied subsequent sale of such unrecorded sales and, therefore, there was sufficient and reasonable material in the hands of the AO to deduce that the assessee was not showing its true turnover during the year and that was the reason that the assessee, when confronted with such concealment, was pushed to back seat and to surrender Rs. 5 lakhs to cover such unrecorded sales/purchases. 2.15 Hence, for the reasons stated above, the issues involved for the disposal of this ground of appeal are decided against the assessee and in favour of the Revenue. Therefore, against a surrender of Rs. 5 lakhs made by the assessee d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 4,72,914 were found and the assessee was earning GP rate of 12.4 per cent in the preceding year. On that basis, investment and profit was worked out at Rs. 5,31,555 against which the assessee had made disclosure of Rs. 5 lakhs. Therefore, supporting evidence was available when the assessee agreed to surrender a sum of Rs. 5 lakhs when first statement was recorded on 20th July, 1995. This Bench of the Tribunal in the order dt. 15th July, 2004, for the asst. yr. 1995-96 at para 2.9 observed that— "The assessee has also not led any evidence to prove his contention that against this forced surrender, he has complained to the higher authorities. Neither he has brought on record any evidence as to why the higher authorities did not consider his complaint against the forced surrender." At para 2.10 it had further been observed in the said order— "The assessee has also not given any reason as to why the lady ADI forced him to make a surrender of Rs. 5 lakhs. It is also not a case where immediately at the beginning of a survey, the assessee was forced to make a surrender of Rs. 5 lakhs whereas on the other hand, when the survey party cornered the assessee regarding unrecorded ..... X X X X Extracts X X X X X X X X Extracts X X X X
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