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TMI Blog2013 (10) TMI 478X X X X Extracts X X X X X X X X Extracts X X X X ..... acts. Also in view of the decision of Hon'ble Kerala High Court in the case of Paul Mathews And Sons vs. C.I.T. reported in [2003 (2) TMI 25 - KERALA High Court] , where it has been held that whatever statement is recorded under section 133A of the Act, it is not given any 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 as contemplated under law - Also no books of account has been rejected by the A.O. and on one hand, the AO is accepting investment made in the building and on the other hand in the absence of any incriminating document is alleging that the assessee has made undisclosed investment. The AO cannot blow hot and cold in the same breath in this regard – Decided in favor of Assessee. - I.T.A. No. 470 (Asr)/2011 - - - Dated:- 7-10-2013 - Sh. H. S. Sidhu And Sh. B. P. Jain,JJ. For the Appellant : Sh. Salil Kapoor Ms. Ananya Kapoor, Advocates For the Respondent : Sh. Mahavir Singh, Sr. DR ORDER Per Bench : This appeal of the assessee arises from the order of the CIT(A), Amritsar, dated 01.07.2011 for the assessment year 2006-07. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conducted. The assessee was asked to explain as to why the said amount of surrender for Rs.20 lakh was not reflected in the return of income for the A.Y. 2006-07. In this regard, the assessee furnished the copy of letter of the then Joint CIT, Range-VI, Pathankot written to the assessee vide letter No.8817 dated 20.11.2006 and its reply dated 23.11.2006 received on 27.11.2006 as per which the surrender was for Rs. 8 lakh for the financial year relevant to the assessment year 2007-08. Therefore, a letter No.2249 dated 20.11.2008 was sent to Addl. CIT, Range VI, Pathankot vide which his direction u/s 144A of the Act were sought on the issue. The Addl. CIT Range VI Pathankot has given his direction u/s 144A vide letter dated 24.12.2008 and the same is reproduced as under: "In the above case, a survey u/s 133 of the Act was carried out on 06.10.2006 in which the assessee vide letter dated 06.10.2006 surrendered a total sum of Rs.53,00,000/- as follows: During F.Y. 2005-06 (a) On account of Investment in construction of shop building Rs.20,00,000 During F.Y.2006-07 (a) Investment in cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... renovation of building and this amount stood at RS.107.26 lakhs upto 31.03.2008. It may be noted that building consists of a total covered area of about 8000 sq. feet comprising of four and a half floors. Out of this only the ground floor, first floor and kitchen have been completed even upto date and the balance interior and other work of other floors is still incomplete. The assessee had obtained a loan from the Hindu Co-operative Bank, Pathankot for the purpose of renovation. No discrepancies were found in the account of building during the survey and even a cursory look at the expenditure debited in the books on this account reveals that it is more than adequate. 6. After the personal hearing on 22.11.2006, the JCIT in view of the facts and circumstances of the case, reduced the amount sought to be added to income to R.8 lakhs for the F.Y. 2006-07 and nil for the F.Y. 2005-06. The assessee was asked to file a revised surrender letter. 7. On 27.11.2006, the assessee filed a letter acknowledging the revised surrender of Rs. 8 lakhs as settled on 22.11.2008 with the JCIT, Pathankot. 8. No further communication was received from the Department and it was adduced that the dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT/R-VI/PTK/2006-07/8817 and in continuation of our petition dated 05.11.2006 and the verbal discussion on 22.11.2006 with your goodself and with a view to settle the grievance petition with your department and as advised, I offer Rs.8 lacs as revised surrendered in cash only in current year's income, subject to no concealment, prosecution or harassment under any provisions of Income Tax Act. A perusal of the record shows that there is no evidence of the revised surrender of Rs. 8 lakhs being accepted by the department. The assessee has also failed to furnish any evidence of its acceptance as claimed by it despite being given adequate opportunity. It is also held that the assessee had voluntarily surrendered a sum of Rs.20,00,000/- for A.Y. 2006-07 during survey u/s 133A of the Act on account of investment in construction of shop building as evident from the above discussion as well as following facts: 1. The assessee surrendered this amount in statement of Sh.Rishi Arora recorded on the date of survey. At the conclusion of the statement it is clearly verified by Sh.Rishi Arora that the statement has been given without undue pressure and that the survey was conducted in a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1." 4. Before the Ld. CIT(A), the assessee made submissions, which were forwarded to the A.O. for remand report, which was submitted and the assessee submitted the rejoinder and after considering the remand report and the rejoinder of the assessee, the ld. CIT(A) confirmed the action of the Assessing Officer. 5. The Ld. counsel for the assessee, Ms. Ananya Kapoor, Advocate appearing alongwith Sh. Salil Kapoor Advocate argued that the assessee initially surrendered a total amount of Rs.53 lakhs comprising Rs.35 lakhs on account of building, Rs.15 lakhs in cash and Rs. 3 lakhs on account of shortage of stock. The said sum of Rs. 35 lakhs surrendered on account of building was bifurcated into two yeas i.e. for the impugned year and in the following year. A sum of Rs.20 lakhs was surrendered during the impugned year on account of investment in construction of the building. The said surrender was made by the assessee without the knowledge of the relevant facts and adequate knowledge of the books of account and under mental tension and trauma. After the survey, the assessee realized the import of the surrender made and accordingly, he filed a grievance petition before the JCIT and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to investment in Saria and Bajri approximately to Rs.15-20 lakhs, which is without any evidence on record. The assessee has submitted the explanation of each and every bill where the AO has made the objection which has not been taken in right spirit by the ld. CIT(A). Ms. Ananya Kapoor, Advocate relied upon the decisions of various courts of law. She relied upon the decision of ITAT, Delhi Bench in the case of Sh. Satish Builders vs. Asstt. Commr. of Income Tax reported in (2009) 23 DTR (Del)(Trib) 171 dated 13.02..2009 and relevant para 9 of the said decision was quoted as under. "9. We have heard the parties and the issue and have perused the material on record. The issue is as to whether the assessee has successfully retracted the surrender statement. At the outset, it is seen that other than the statement made by the assessee, there is no material on record to support the Department's case. In the survey, as rightly pointed out by the ld. counsel for the assessee, no inventory was made. The assesee is a civil contractor. No site was visited. The case of the Department thus hinges only and only on the surrender statement. It is well-settled that an addition, in order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders." 5.2. She also relied upon the decision of Hon'ble Supreme Court in the case of Sargam Cinema vs. C.I.T. reported in (2010) 328 ITR 513 (SC), wherein it has been held that assessing authority could not refer the matter to the Departmental Valuation Officer in a case where there was a categorical finding recorded by the Tribunal that the books of account were never rejected. 5.3. In the facts and circumstances, Ms. Ananya Kapoor Advocate argued that in the present case, the assessee has made the revised petition and on realizing the import of surrender was made without adequate knowledge of the books of account and actual investment was made. Accordingly, a revised petition was made before the JCIT, who gave the personal hearing to the assessee and after having discussion with the JCIT, the revised surrender was made on 27.11.2006, which is a material on record. No adverse material has been brought on record by the Department in this regard. The Department is relying upon the statement made on the date of survey which stands retracted befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rival contentions and perused the facts of the case. There is no dispute to the fact that the assessee had made a surrender initially amounting to Rs.53 lakh i.e. on account of investment in construction of shop building at Rs.35 lakhs, (Rs.20 lakhs in the impugned year and Rs.15 lakhs in the following year) and Rs. 15 lakhs Rs.3 lakhs in cash and shortage in stock in hand in the following year. It is also not under dispute that the assessee had made the submissions before the AO which are available at pages 2 3 of AO's order and also reproduced hereinabove. The assessee has made a grievance petition, as stated, on realizing the import of the surrender and on realizing that he does not have adequate knowledge of books of account and there is no discrepancy in the books of account vis- -vis investment made. Personal hearing was given by the then JCIT on 22.11.2006 to Sh. Rishi Arora, partner of the firm. On 27.11.2006. The assessee has revised surrender in total at Rs. 8 lakhs as against Rs.53 lakhs mentioned hereinabove. On realizing that there is no further communication received from the Department, it was adduced by the assessee that surrender made has validly been accepte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... document found and therefore, even if the admission has been made on the date of survey that cannot be conclusive and the assessee has the right to prove that such admission made was incorrect. This proposition has been fortified by the decision of Hon'ble Supreme Court in the case of Pullangode Rubber Produce Co. Ltd. vs. State of Kerala And Another reported in (1973) 91 ITR 18, where it has been held that admission is an extremely important price of evidence but it cannot be said that it is conclusive and it is open to the assessee who made the admission to show that it is incorrect and the assessee should be given a proper opportunity to show that the books of account do not disclose the correct state of facts. Also in view of the decision of Hon'ble Kerala High Court in the case of Paul Mathews And Sons vs. C.I.T. reported in (2003) 263 ITR 101, where it has been held that whatever statement is recorded under section 133A of the Act, it is not given any 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 as contemplated under law. Also no books of account has been rej ..... X X X X Extracts X X X X X X X X Extracts X X X X
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