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TMI Blog2012 (10) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... e operation in the case of Shankar Gutkha group. At the time of survey, an excess stock of Rs,37,11,782/- was worked out by the survey party on the basis of a provisional trading account prepared, Since partner of the appellant firm could not explain excess stock of Rs. 37,11,782/-, the same was surrendered and they agreed to pay taxes on the value of excess stock. At the time of survey, an excess cash of Rs. 2,14,000/- was also found and the same was also declared by the partners of the firm as the income of firm other than its regular income. After the survey operation, the appellant firm filed a return of income declaring an income of Rs. 2,60,620/-, In this return of income, the amount of excess stock disclosed during the survey amounting to Rs,37,11,782/- was not found to be included by the AO, Similarly, the AO has also noted that an excess cash of Rs. 2,14,000/- found during the survey and declared by the partner of the firm as the income of the firm other than its regular income, was not included. In view of these findings, the AO relying on the report of survey found that books of account of the appellant was not maintained correctly and hence, he rejected books of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excess value of the stock was not correct because the sale and purchase figures were not correctly worked out. In this written submission, working out of sale and purchase figures was made on the basis of the impounded bills and the value of the sales was arrived at Rs. 67,58,352/- and the value of purchase was arrived at Rs. 71,79,376/-. After working out the revised figure of sale and purchase on the basis of the impounded bills, it was shown that the excess figure of stock was coming to only Rs. 1, 11,242/- taking, into account the figure of excess stock of Rs. 6,60,000/included in the profit & loss account filed alongwith the return of income. The Ld. AR pointed out that the assessee has already surrendered the value of 160 bags of Rs. 6,00,000/- while finalizing its final account which was well reflected in the details filed along with the trading account. On the basis of revised computation of sale and purchase filed in the written submission, it has been pleaded that no further addition is required to be made in the assessment order on account of excess stock in the income declared by the appellant taking into account the fact that the valuation of stocktaking was not done b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii). The basis for computation of sales of Rs. 74,20,097/- should be explained and supporting document should also be produced during the hearing on the basis of which this figures of sales has been computed by you. (iii). Provide your specific comments on the computation of sale and purchase given by the Ld. AR in his written submission. His computation is correct or not and if it is not correct what are the specific defects in the computation of Ld. AR should be specifically mentioned. (2). As against the addition of Rs. 2, 14,0001- u/s 69A for the excess cash found during survey, it has been submitted by the Ld. AR in the written submission that this cash was surrendered by the partner Mr. Neeraj Maheshwary in his hand. In support of this argument, the statement given by him during the course of survey operation is a/so enclosed in the written submission at page no.9 wherein it has been shown to me that he stated that this cash should be considered as his undeclared income and it has been also stated that it is in addition to the regular income of the firm and he is ready to pay tax on this income. Despite this statement of partner the addition for unexplained cash is made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... early and unequivocally, is the best evidence against the party making it and though not conclusive, shifts the onus on to the maker on the principle that what a party himself admits to be true may reasonably be presumed to be so and until the presumption was rebutted, the fact admitted must be taken to be established. The above conclusion is also supported by following court decisions - (Jindal Photo Films Ltd. Vs. DCIT(1998) 234 ITR 170, 177, 178-179(Del). 2. During the course of survey a sum of Rs. 2,14,000/- cash was found in excess which was surrendered by the partner Shri Neeraj Maheshwari. In his statement at page no.7(copy enclosed) the partner Shri Neeraj Maheshwari has surrendered Rs. 39,25,782/-Rs. 37,11,782 + Rs. 2,14,000) in the hands a firm M/s Maya Trading Co. After considering the survey report of the ADI in which it was clearly mentioned that the sum of Rs. 2,14,000/- was surrendered in the hands of the firm, hence, the same was added in the hands of the firm as Mr. Neeraj Kumar Maheshwari could not prove the sources of excess cash found in the premises of the firm M/s Maya Trading company. 3.During the course of survey proceedings number of books of accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d comment on the correctness of the sale and purchase figures worked out by him on the basis of impounded sale bills. In view of the objection raised by the Ld. AR in his rejoinder filed on 15.06.2011, the AO was further asked to submit his report on the computation of sale and purchase figure shown in provisional trading account. In response to my direction, the AO has further submitted his report vide his letter F. No. ACIT/CC/Maya Tdg/Remand/11-12 dated 22.06.2011 and the same is reproduced as under:- "In continuation of remand report filed and explanation asked on 15.6.2011 in connection with the figures of provisional trading account worked out during the course of survey it is submitted as under: (1) That the figures of purchases Rs. 49,00,581/- and sales of Rs. 74,20,097/- worked out by survey team were re-examined with the impounded material. It was noticed that consignment sales of Rs. 6, 86, 753. 85 against Form F seems to be wrongly added in the figures of sales reflected in provisional trading account. After deducting the consignment sales the figure of sales comes to Rs. 67,33,344/- while the appellant submitted the total sales at Rs. 67, 58, 352/-. The difference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Rs. 67,58,352 shown by the Ld. AR in the provisional trading account made by him. Therefore, after discussion with Ld. AR and AO, it has been decided that the amount of excess stock found during the course of survey operation should be reworked after making another trading account by taking sale figure at Rs. 67,58,352/- and purchase figure at Rs. 71,79,376/-.. 5.6 Regarding excess cash of Rs. 2,14,000/-, after examining the statement of Shri Neeraj Kumar Maheshwari, partner of the appellant firm, it has been found that this amount was finally surrendered in the hand of the firm stating in the statement that this amount is his unaccounted income which is in addition to regular income of the firm. The relevant portion of the statement of Shri Neeraj Kumar Maheshwary is given as under:- Further, from the answer to question no.23 in the statement of Shri Neeraj Kumar Maheshwari, it becomes more clear that excess cash of Rs. 2,14,000/- was declared in the hand of the firm and not in the hand of Shri Neeraj Kumar Maheshwari. The relevant portion of this answer is reproduced as under: - 5.7 In the above answer, the total amount of Rs. 39,25,782/- declared in the name of the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock of the appellant is coming to Rs. 28,91,455/- as against the stock of Rs. 37,25,100/- found during the course of survey operation. Therefore, the excess stock would come to Rs. 8,33,645/- 37,25,100 - 28,91,455). As against this excess stock, the appellant has shown that he has already declared the excess stock of Rs. 6,64,850/- as his additional income in the Profit & Loss account and hence the figure of excess' stock declared by the appellant was found short by Rs*1,68,795/- {Rs.8,33,645 - Rs. 6,64,850/-) and therefore, the AO is directed to add Rs. 1,68,795/- in the income of the appellant u/s. 69 on account of the figure of excess stock as computed above and not disclosed by the appellant in the return of income. Therefore, the addition of Rs. 37,11,742/- made by the AO in the assessment order on account of undisclosed stock is sustained to the extent of Rs. 1,68,795/- and the appellant gets relief of Rs. 35,42,987/-. In the result Ground no.3 is partly allowed. 6.3 As regards to the argument of the AO in the remand report dated 16.05.2011, that the confession statement during the course of survey should be considered as best evidence, I find that in the decisions c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt. Therefore, in my opinion, the Ld. AR was able to rebut the confession made by the appellant during the course of survey operation on the basis of impounded document and such rebuttal cannot be brushed aside only on the basis of a statement recorded during the survey operation which was based on a provisional trading account, the correctness of which could not be established by the AO with any supporting evidence. Therefore, in my considered opinion, no addition on the basis of confessional statement can be sustained unless such confession is supported by some documentary evidence and this view has been clearly emphasized by the CBDT in its Instruction No.286/2/2003-IT(lnv.) in which it has been stated as under:- "Instances have come to the notice of the Board where assessee have claimed that they have been forced to confess the undisclosed income during the course of search and seizures and survey operations. Such confessions, if not based upon creditable evidence, are later retracted by the concerned assessee while filling returns of income. In these circumstances, confessions during the search and seizure and survey operations do not serve any useful purpose. It is, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 300 ITR 157 and also submitted that the said decision has been confirmed by the Hon'ble Supreme Court recently. He has also relied upon several decisions in support of the same contention. The copies of the same are filed in the paper book and also relied upon the decision of Hon'ble High Court of Chhattisgarh in the case of ITO vs. Vijay Kumar Kesar, 327 ITR 497. He has also cited some other decisions of the Tribunal, copies of which are filed in the paper book on the proposition that addition was merely made on the basis of statement recorded during the course of survey without bringing any corroborative evidence and the addition cannot be sustained. 4. We have considered the rival submissions and do not find any justification to interfere with the order of the ld. CIT(A). It is well settled law that admission are not conclusive proof of the matter. They may be shown to be untrue or have been made under mistake of fact or law. Circumstances have to be seen under which same are made. It can be withdrawn unless it is estoppel and conclusive. Hon'ble Supreme Court in the case of Pullangode Rubber Products Co. Ltd. 91 ITR 18 held that the assessee should be given opportunity to sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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