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TMI Blog2012 (8) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of Hon'ble MP High Court in the case of Badriprasad Bhagwandas & Company [1995] 82 Taxman 109(MP) by applying NP rate of 5% on the sales estimated at 2.5 times of license fee. The AO held that the assessee maintained books and the ratio of the cited case is not applicable in the case of the appellant. He, therefore, made assessment on a total income of Rs. 42,74,773/- by taking figures of share profit of each member of AOP credited in his capital account in the ledger impounded and identified as Annexure B-8 of survey inventory. 4. By the impugned order, the ld. CIT(A) deleted the addition after having the following observations :- "3.2 Assessment records and survey folder were called for and examined. In fact copies of various statements recorded were supplied to the ARs present in course of appeal proceedings on 24.08.11 from the survey folder obtained. The appellant filed further detailed written submission on 24.08.11. Relevant portion of submission relating to facts is extracted is here under: " 1. The survey u/ s 133-A was conducted Assesses offices premises 04.02.2009. 2. Statement Recorded during the survey ii/ e 133-A member of the AOP. 3. Rough papers & memoran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have come to the notice of the Board where assessee has claimed that they have been forced to confess the undisclosed income during the course of search & seizure and survey: operations. Such confession, if not based upon creditable evidence, are later retracted by the concerned assessee while filling returns of income. In these circumstances, confession during the course of the search. & seizure and survey operations do not 'serve any useful purpose. It is, therefore, advise that there should be focus and concentration on collection of evidence of income which leads to information on what not has been disclosed or is not likely' to be disclosed before the Income tax departments. Similarly, while recording statement during the course of search & seizure and survey operations no, attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely." 3.3 During appeal hearing on 13.09.11, the appellant furnished further written submissions specifically emphasizing its reliance on the authoritative judgment of Hon'ble MP High Court in the case of Badriprasad Bhaghwandas & Co. and not accepting assessee's own documents includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the menaces of the business but many more typical and attendant problems are to be faced in day to day working of contract through out the year. The wine shops of the AO? were scattered at different places and locations. Many more expenses incurred by the persons in charge of the shops remained to be recorded only because of the reasons stated above. In the Hon'ble jurisdictional High Court's order, after mentioning the inability of liquor contractors to maintain requisite accounts, the following extracts reproduced in para 5 are representative of the notoriety of the liquor contract business as upheld by the various benches of I.T.A.T. and as conceded by the authorized representatives: " The learned authorized representative of the assessee fairly conceded that in this line of business, and in the case of all other assesses, Tribunal Jabalpur, Indore benches and as also Delhi benches have been upholding the working out of net profit as has been worked out in the case of this very assessee for both the years, viz., by estimating the sales at 2.5 times of the license money paid and by application of 5% net profit rate." The survey findings-rough working and admissions not supporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 976 sc 376,382. After survey, when the members contacted the tax advisor late P.B.Somani, the whole story was stated before him. In the meantime, notices from department were received for filing the return. Unfortunately, Shri Somani who alone was apprised of threadbare details of the survey and who alone knew the understanding of the members of the AOP about keeping of record of accounts, concept of profits, unfortunately suffered a' brain, hemorrhage on 09-02-09 (much before he could separate the grain and the chaff and prepare a proper and lawful retraction from' the factually incorrect and legally untenable admissions made 'by 'the members of the AOP) and eventually, he expired on 02-03-09. After his post death rituals, Shri Girish Somani, his advocate son took up the matter of preparing the returns and. the returns were filed on', 15-04-2009 after getting necessary documents' of tax collected at source from Excise Department. Since, there were no proper books of accounts, the returns were filed on the basis of formula recognized in' the Hon'ble jurisdictional High Court's decision in the case of Badri Prasad Bhagwandas & Go. v CIT (1995) 82' Taxman '149(MP), taking net profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2008) 300ITR 157 (Mad.); 214 CTR (Mad) 5S9, has given the following principles while concluding its decision in favour of the assessee: 1) An admission is an extremely important piece of evidence but it cannot be said that it is conclusive and it is open to a person who made the admission to show that it is incorrect and that the assessee should be given the proper opportunity to show that the books of account do not correctly disclose the correct state of facts. 2) Statement recorded u/s 133A is not given evidentiary value obviously for the reason that the officer is not authorized to administer oath and to take any sworn statement-which alone has evidentiary value. It is held in CIT v Dhingra Metal Works, (2010) 328 ITR 384, 391(Del) that the word "may" used in section 133A(3)(iii) clarifies beyond doubt that the material collected and the statement recorded during the survey was not a conclusive piece of evidence by itself. In the present appellant's case, the so called profit figures compiled for purposes of the capital accounts of the members of the AD? are not at all corroborated by any evidence whatsoever, much less by any books of account as understood under the laws of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uded by himself even after the survey findings were available with him, while, at the same time, not accepting similar determination of total income for the subsequent AYs without giving any reason for adoptinq such differential stand. Summary of the submissions: 4. To sum up, the most unscientific and in consequential working of the fifth-class- pass accountant of the appellant for appeasinq and inflated capital accounts of the members of the appellant AOP was unfortunately taken by the ld AO as sacrosanct and as gospel truth. The ld AO did not even bother to test check as to whether the total income extrapolated from such capital accounts, was at all corroborated by any evidence or even by the kachha accounts. He adopted such extrapolations and did not even maintain a consistent stand for all the AYs involved. Finally, the ld AO did not go even by the authoritative judgment of the Hon'ble jurisdictional High Court in a perfectly comparable liquor 'contractor's case. He did not go by the settled law and even CBDT circulars on the issues involved in the assessee's case either." 4.0 The AR of the appellant also advanced further arguments on points which are not detailed or elabor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present there were taken by the officers of the department. Signatures were made in haste and in a state of drowsiness with a view to ensure .early return of the survey party. At that time we did not know what was written in the statement. (x) In para 12, it is stated that after survey on 04/05.02.09, Shri PB Somani, a senior tax practitioner and the appellant's was contacted and consulted on 06.02.09. (xi) In para 13, it is stated that unluckily Shri PB Somani, appellant's tax consultant got brain hemorrhage on 09.02.09 and was shifted to Indore hospital and there he died on 02.03.09. (xii) In .para 14, it is stated that, after the death of Shri PB Somani and his Pagdi ritual, his son ,Shri Girish Somani tax practitioner was contacted on 17.03.09. (xiii) In para 15, it is stated that, in between these days" notices u/ s 148 were received from the ITO, Khargone. (xiv) In para 16, it is stated that after 17.03.2009 a letter was written by the appellant to the ,Excise Department seeing information for preparation and 'filing of the income tax returns. The certificates of license fees and TCS were provided by them on 12.04.09. (xv) In para 17, it is stated that the returns, for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egal as well as on merits of addition of Rs. 20,58,613/- and are taken up for consideration simultaneously. The main contention of the appellant is that the loose papers and rough workings and calculations based on such loose papers and other relevant and irrelevant papers found during survey at the administrative office of the AOP have been termed by the AO as "books of account" and he has refused to accept the contention of appellant to compute the total income based on MP High Court's authoritative decision which is binding on all the officers, Tribunals and courts in MP. The appellant has elaborately discussed the full facts of survey proceedings which continued till morning of the next day and the puzzled mental status of the members at the time of making the statements before the survey party. The appellant's efforts are manifest in the affidavit to promptly contact the legal advisor after survey, the name sake literacy of members of the appellant AOP, inefficiency of the accountant, consequent inability to draw Profit and loss Account and Balance Sheet on the basis of rough and raw records of incomings and outgoings in the business and filing the returns showing profit calcu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e validly retracted from within a reasonable time if it is shown that the admission in the statement was given under a mistaken view of the true facts and otherwise than in a normal state of mind. Such a statement cannot be made a sole basis for addition. 4.3.1 The appellant AOP's members, immediately after survey, made retraction by filing returns of income on 15-04-2009 on the basis of formula approved by the Hon'ble jurisdictional High Court. Thus, the retraction made by the appellant AOP within a period of less than 3 months from the date of survey cannot be said to be a belated retraction particularly in view of the appellant's AR suffering a stroke and eventual death. It is also not the case of AO that regular books of account of the AOP containing the Trading A/c, P/L A/c and Balance Sheet depicting correct and complete results of the business activities of the AOP were in possession of the appellant AOP and still the AOP willfully chose to file the return on the basis of formula approved by the jurisdictional High Court. In truth, the AO's own order is not containing requisite details and reasons. It is, on the other hand, a non-speaking order, pure and simple. The true re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,00,340/- and Rs. 36,61,218/-/- are directed to be deleted. Assessing Officer is directed to accept income as returned. " 5. Against the above order of CIT(A), the Revenue is in further appeal before us. 6. We have considered the rival submissions and have gone through the orders of the authorities below and found from record that the appellant is an AOP came into existence from 1-4-2004 The AOP running the business of country liquor. Survey u/ s 133A was conducted on dated 04.02.2009 at assesses office where the employee of assessee AOP maintained memorandum of rough books & diaries etc. The assessee AOP did not maintain or prepared regular books of accounts for determine Gross Profit & Net Profit. 7. In all the years under consideration, on the basis of share of profit shown in the seized document/rough records, the Assessing Officer by the assessee, the Assessing Officer has made the trading addition by disregarding 5 % profit shown by the assessee as per verdict of Hon'ble Jurisdictional High Court in the case of Badriprasad Bhagwandas and Co.(supra). It was argued by the ld. Authorized Representative that the assessee was not maintaining proper and regular books of accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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