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TMI Blog2010 (12) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... contrary judgments - Moreover once the diary is impounded, may be illegally, the material in the diary can always be used for the purpose of proceedings under the Act - This view is supported by the judgment of Hon'ble Supreme Court in case of Pooram Mal vs DI (1973 -TMI - 6422 - SUPREME Court) - The argument advanced is therefore of no help to the assessee - Decided against of assessee. - ITA No. 196/M/2009 - - - Dated:- 31-12-2010 - D. Manmohan, Rajendra Singh, JJ. N.M. Gami and Rupa N. Gami for the Appellant P.N. Devdasan for the Respondent ORDER Rajendra Singh: This appeal by the assessee is directed against the order dated 8.10.2008 of the CIT(A) for the assessment year 2003-04. Though the assessee has raised several grounds in the memorandum of appeal, the effective dispute as admitted by the assessee at the time of hearing of the appeal is only regarding addition of Rs.6 lacs made by the AO on the basis of disclosure made by the assessee at the time of survey. 2. The facts of the case as born out from the records as follows. The assessee was engaged in the business of construction and land development. In addition the assessee was also doi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur project with cheaper rate and on time. Generally our representative goes to them makes cash payment while placing the orders, however, the cheque payment is made at the time of delivery. 4. Further in response to question No.17 the partner admitted that cash receipts shown in the diary represented income of the firm from undisclosed sources which would be offered for taxation over and above the regular income of the firm. Thereafter in response to question No.18 the assessee to cover up various discrepancies declared income of Rs.45 lacs voluntarily. The said Q.No.18 and answer thereto is reproduced below as a ready reference: Q. 18) Do you want to add anything further after going through the statement recorded so far ? Ans: In order to cover up any discrepancy which may be noticed after going through the books of accounts which will be completed in due course, we offer an amount of (Rs.Forty Five Lakhs) Rs.45,00,000/- voluntarily. We promise to pay the taxes due on it by 15th March'2003. The above amount is offered in order to buy peace and with the intention that the department will not make any roaring enquiries in these regards, we further hope that no harassment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tners Rs. 9,23,471/- Remuneration to partners Rs.15,22,000/- Net Profit for the year Rs.21,53,566/- Rs.45,99,037/- Further the books of accounts were completed by incorporating all the entries as reflected in the disclosure statement and a note to that effect is attached with notes to accounts forming part of the financial statements. 7. The AO however did not accept the explanation given by the assessee. It was observed by him that the assessee was not maintaining any regular books of accounts. The partners had themselves agreed that they were having income on account of demolition of old structures, consultancy charges, supervision charges, open car parking space etc. as per the transactions noted in the diary total of which was admitted to be Rs.33.73 lacs. In addition the assessee had made some purchases of granite in cash which was not verifiable as no books were maintained. In order to cover the unaccounted transactions in the blue diary, cash purchase of granite and other discrepancies in the books the assessee had offered a sum of Rs.45 lacs as additional income. The assessee had therefore no justification for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e onus was entirely on the assessee to prove that the remaining amount of Rs.6 lacs was not earned by the assessee. CIT(A) accordingly confirmed the addition made by the AO aggrieved by which the assessee is in appeal before the tribunal. 9. Before us the Learned AR for the assessee submitted that the statement dated 9.1.2003 of the partner based on which the additions have been made had not been given to the assessee. The assessee had requested for a copy of the statement vide letter dated 7.10.2003 but the copy was not given. Therefore using the statement against the assessee was in violation of principles of natural justice. Reliance was placed on the judgment of Hon'ble High Court in case of Suguna Poultry Farm vs Commercial Tax Officer (35 VST 341). It was further submitted that the assessee came to know about the addition based on the statement only after the assessment order was passed. Therefore the assessee before CIT(A) filed an affidavit dated 11.7.2006 to the effect that the survey party had not found any incriminating evidence against the assessee. The diary claimed to have been found by the survey team at the premises of the assessee was fabricated and the partner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue. In this case in the statement recorded the assessee had made additional disclosure of income and such admission had an evidentiary value as the same was not retracted. It was also pointed out that it was not correct to say that the assessee did not have the copy of the statement. He referred to para 3.3 of the assessment order in which it was clearly mentioned that the assessee vide letter dated 30.12.05 had clearly explained that declaration of Rs.39 lacs was based on the said voluntary statement made by the partner at the time of survey. It was also mentioned in the said letter that Xerox copy of the statement was already on record. It was thus clear that the assessee did have the copy of the statement. Moreover even if the assessee did not have the copy of the statement it could have applied for copy of the statement. The assessee did not retract from the statement after the survey or even during the assessment proceedings. In fact the assessee based on the same statement had itself declared income of Rs.39 lacs in the return of income. Therefore the statement could not be considered as partly correct and partly incorrect. The assessee filed the affidavit only during appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven in para 5 earlier. When asked to explain the discrepancy at the time of assessment proceedings, the authorized representative of the assessee vide letter dated 13.12.2005 submitted that the income declared of Rs.39 lacs was based on the said voluntary statement made by the partner at the time of survey and also stated that Xerox copy of the statement was already on record. It was also stated the after considering the payment of interest and remuneration to partners was Rs.45,99,037/-. 11. It is pertinent to note that the assessee neither after survey nor even during assessment proceedings retracted from the statement made at the time of survey. In fact the assessee based on the same statement had declared income of Rs.39 lacs. Income of Rs.33.73 lacs was admitted based on the entry in the blue diary. However considering other factors such as cash purchases etc. the assessee had declared higher additional income of Rs.45 lacs which in the return of income had been reduced to Rs.39 lacs. This means that even in the return of income the assessee admitted some income on account of other discrepancies in addition to entries in the blue diary as per which income was only Rs.33.7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of same statement and therefore it could not be under pressure and threat. Considering the facts and circumstances of the case we are of the view that the affidavit has been rightly rejected as unreliable and as an afterthought. 13. The Learned AR for the assessee has also raised some legal issues. It has been argued that the statement recorded at the time of survey has no evidentiary value as there is no provision for recording statement on oath during survey. We agree that the statement does not have a binding evidentiary value but the same can always be used by the department. Moreover the statement is nothing but admission by the partners of undisclosed income based on entries in the diary and other discrepancies. It is a settled legal position that admission is extremely important piece of evidence as held by Hon'ble Supreme Court in case of Pallangode Rubber Produce Co. Ltd. vs State of Kerala and Anr. (91 ITR 18). However the admission is not conclusive and it is open to the assessee who made the admission to show that it was incorrect. The assessee has not produced any material to show as to how the income of Rs.45 lacs disclosed at the time of survey was inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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