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TMI Blog2016 (5) TMI 1157X X X X Extracts X X X X X X X X Extracts X X X X ..... to take each entry, quantify each and make separate addition for each. It is very unjustified to add the surrender and further add each item, this amount to double jeopardy which is not permissible. Looking at the entirety of circumstances and fact that the assessee enhanced his surrender from 3,50,42,961/- to 9,38,50,009/-; the fact that the balance sheet reflects the sum total of his transactions as on 01.04.2008, it is not justifiable to add the totals of both the balance sheets. On verification of both the balance sheets it emerge that the one filed for income tax purposes is part of and incorporated in the one found during the course of survey. Therefore, in our considered view, the addition of 2,13,15,248/- as excess liabilities has been rightly deleted by ld. CIT(A). His order on this issue is upheld - Decided against revenue Addition of interest income - Held that:- Shri Rajendra Ji Was debtor who has squared up his account with the assessee as on 01.04.2008. Ld. DR could not dispel such factual findings. Further it is found that assesee’s cash balance as per balance sheet is 18,20,852/- and this amount being the interest income of the assessee during the year has been incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds in respective appeals. ITA No. 827/JP/2011 - A.Y. 2008-09 (Assessee Appeal ) ''1 On the facts and in the circumstances of the case, the ld. CIT(A) has grossly erred in upholding an addition of ₹ 32,43,730/- made by the AO by alleging the same as undisclosed investment in purchase of property in the name of assessee's son Shri Narain Agarwal. 1.1 That the ld. CIT(A) has further erred in ignoring various submissions made and evidences adduced and also by ignoring the income admitted and declared by the assessee, thus the addition of ₹ 32,43,730/- so confirmed by ld. CIT(A) deserves to be deleted.'' ITA No. 1042/JP/2011 - A.Y. 2008-09 (Revenue ) ''Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) is justified in deleting :- (i) The addition of ₹ 2,13,15,248/- made by the AO on account of excess liabilities. (ii) The addition of ₹ 3,45,000/-made by the AO on account of unaccounted loans. (iii) The disallowance of ₹ 31,065/- made by the AO out of motor car expenses and depreciation on car by applying u/s 38(2) of the I.T. Act on account of personal use. 3.1 Ld. Counsel at the outset contends that this is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The CIT (A)-I, Jaipur has also mentioned this fact in the appellate order that the assessee did not discharge his onus to the extent that he did not verify the liabilities appearing in the duplicate balance sheet in order to claim the set off these liabilities. Still the common liabilities were worked out between both the balance sheets. The fact that there was no common asset except that of jewelers association of ₹ 25,000/-, cannot be overlooked alongwith the fact that there are some common names on the liabilities side with different amounts. Therefore, only on the basis of the liabilities side, it cannot be concluded that the balance sheet filed with the original return is incorporated in the duplicate balance sheet. On the basis of the assets side, it can be clearly established that the duplicate balance sheet has been maintain in addition to the regular balance sheet. Still the relief of deducting common liabilities of ₹ 1,06,68,208/- was given to the assessee on the basis of the directions issued by the then Additional CIT, Range1,Jaipur u/s 144A. Hence, the common liabilities were worked out and relief to that extent was also given to the assessee apart from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the income attributable to entries in the papers including the Ann. 24 impounded during the course of survey. It contained the details of the transactions disclosed in the regular return along with intermixed unaccounted assets and liabilities. Assessee by letter dated 14.09.1010, filed during the course of assessment proceedings, suo motu increasing the additional income, furnished all relevant details and working of the undisclosed income which is placed on PB 14-15. The assessee thus discharged his onus to effectively explain the working of additional income. Consequently the burden then shifted on the department to rebut the working by cogent reasoning, facts and working. The revenue has not rebutted the assessee's explanation and working in any meaningful and cogent manner. In this eventuality ld. CIT(A) has rightly upheld assessee's version. Thus the further additions have been made by AO on assumption and presumptions. The estimate of undisclosed income from summary of paper impounded during survey reflects total of assets as reduced by the liabilities and the residual figure appears termed as 'Capital'. The calculation of the additional income declared by the assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve to the assets side which would be akin to going rounds in circles unnecessarily Thus there is neither factual basis nor cogency of reasons to take a presumptive inference that the regular Balance Sheet is separate and Annexure A-24 represents only unaccounted assets and liabilities and added it separately. From the observation of the Ld. AO relevant question which arises and remains unanswered is : - If Ann-24 is a separate balance sheets are different and not combined one would a single entry find place in one balance sheet or in both the balance sheet? Ld. AO herself found common names/entries amounting to ₹ 1,06,68,208/- which find place in both the balance sheets. It demonstrates that the accounted and unaccounted balance sheets are interdependent, intermixed and complimentary to each. The sole incriminating paper PB7 is relied by ld. AO, based thereon, whereas assessee offered additional income of ₹ 9,38,50,009/- which is much in excess of the amount arrived at by the Ld. Additional Commissioner u/s 144A. Ld. AO has treated the assessee's working like a Profit & Loss Account, whereas it was in the form of a condensed summary of total business transactions as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the balance sheet showing the sum total of his transactions as on 01.04.2008, it is not rational nor justifiable as per accounting principles to add the totals of both the balance sheet. Particularly when it is clear on verification of both the balance sheets that the one filed for income tax purposes is incorporated in the actual one found during the course of survey. Therefore, the addition of ₹ 2,13,15,248/- is directed to be deleted." In the circumstances, it is submitted that ld. CIT(A) has accorded the relief after appreciating all the relevant factual aspects, evidentiary nature of impounded documents, accounting principles, sec. 144A directions etc. his orders deleting above deletion deserves to be upheld. 4.5 Reliance for these propositions is placed on following judicial precedents:- CIT Vs. S. Khader Khan & Son (Mad.) 300 ITR 157 Income tax survey - Scope of section 133A - Difference between sections 133A and 132(4) - Statement in survey operations - Not conclusive piece of evidence - Statement by partner in survey operations regarding undisclosed income of firm - Subsequent retraction of statement by firm - Amount disclosed by partner not assessable as inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even before assessment suo motu declaring more undisclosed income than agreed during survey, department has unjustifiably made the assessee a victim of "TAX TERRORISM". Such tactics have been recently deprecated by Hon'ble PM and FM. CBDT has carved out assessee's charter of rights to be abided by revenue authorities during assessments, survey and search which is duly published in print, electronic media as well as CBDT's national portal. It has been declared that the income tax authorities have to act strictly in accordance with charter while exercising their powers including Survey And Search action. To buttress his arguments, Ld. Counsel in written submissions has referred to the speech given by the Hon'ble Finance Minister on the floor of Parliament in this behalf, while proposing to simplify the procedure of searches and surveys which reads as under:- "Para 151(i) "Simplifying the procedure and methods employed during search and seizure, and during survey by the Income Tax department. First, hereafter, stocks found during the course of a search and seizure operation will not be seized under any circumstances. Second, no confession shall be obtained during such search and seiz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject and purpose of provisions. 3. 273 ITR 305 CIT Vs. Durgesh Oil Mills (All.) Circular - CBDT - Circular binding on Income Tax Authorities. It is well settled that the circular issued by the Central Board of Direct Taxes is binding on authorities. 4. 291 ITR 172 CIT Vs. Ashok Kumar Soni (Raj.) Admission in statement during search - Not a conclusive proof of fact and can always be explained - Retracted statement of assessee - Second statement to be read together to evaluate weight of admission for appreciating evidence. 5. 328 ITR 384 CIT Vs. Dhingra Metal Works (Delhi) Survey- discrepancy in stock and cash-Addition on basis of statement made during survey-Assessee later contending that statement incorrect and that discrepancy reconciled as It was a mistake-statement made under section 133A not conclusive proof- Assessee able to explain discrepancy in stock by production of relevant record - Addition to be deleted-Income-tax Act, 1961, s. 133A. 5.1 Apropos revenue ground no. 2 ld. AO made an addition of ₹ 3,45,000/- on account of entries found noted in the impounded material marked as A-14, during the course of survey has enquired about the contents thereof; there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 3,45,000/- is directed to be deleted." 5.4 Since, the additional income offered at ₹ 9,38,50,009/- is computed on the basis of a document prepared at the end of the previous year relevant to assessment year under appeal and the loose paper under reference contained the entries prior to the end of the previous year, thus the same stood covered in the memoranda state of affairs as at 31.03.2008 and any further addition is not warranted. It is therefore, contended by ld. counsel that the Ld. CIT(A) has rightly deleted the addition and thus the order of Ld. CIT(A) deserves to be uphold on this score. 6.1 Apropos revenue ground no.3, it is contended that ld. AO disallowed ad hoc 20% out of following expenses for possible personal use which has been deleted by the Ld CIT(A):- Particulars Claimed Expenses Disallowance @ 20% Motor Car Expenses 1,18,235.00 23,647.00 Depreciation on Car 37,091.00 7,418.00 Total Disallowance 31,065.00 These expenses are fully vouched and incurred under the business compulsion and commercial expediency and are wholly and exclusively for the purpose of the business furthermore depreciation is a statutory deduction hence the same cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in our considered view, the addition of ₹ 2,13,15,248/- as excess liabilities has been rightly deleted by ld. CIT(A). His order on this issue is upheld, this ground of revenue is dismissed. 7.1 Apropos second revenue ground in the entire survey proceedings, statement there is no reference to any coded figures. Ld. CIT(A) has rendered clear finding of fact that these entries appear to be of interest because the date has been mentioned regularly for a two month period for the same amount. Ld. CIT(A) has cited examples of - 400 / D. Modi 25.9 to 2.11. Then 400 / Rajendra 01.11.07 to 2.1.08; perusal of page 1 of annexure 24 it is seen that Shri Rajendra Ji Was debtor who has squared up his account with the assessee as on 01.04.2008. Ld. DR could not dispel such factual findings. Further it is found that assesee's cash balance as per balance sheet is ₹ 18,20,852/- and this amount being the interest income of the assessee during the year has been included in this cash balance on the basis of which the surrender has been made. In our considered view the impugned addition of ₹ 3,45,000/- has been rightly deleted by ld. CIT(A), which order deserves to be upheld. This g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... papers व नोट बुक आदि को देख लिया है इनमें से बहुत से कागजों का अभी स्पष्टीकरण नहीं दे पा रहा हूँ इनमें से बहुत से ऐसे कागजात होंगे जो नियमित पुस्तको में दर्ज नहीं होंगे। इस पेटे में वित्तिय वर्ष 2007-08 रू. 8,00,000/- की अतिरिक्त आ&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... कार्यवाही के दौरान पाए गए अघोशित स्टाक रू. 2,94,99,247/-, नगद उधार के पेटे रू. 29,00,000/- मकान के निर्माण में किए गए अघोषित निवेश के पेटे रू. 14,43,714. व अशोक अग्रवाल को अघोषित आय से दिए गए उधार के पेटे रू 4,00,000/-व अन्य loose papers में वित्तिय वर्ष 2008-09 से संबं ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... पेटे मैं श्री बंशीधर अग्रवाल द्वारा मैं. अग्रवाल एंड कम्पनी के पांच चैक अग्रिम कर (वित्तिय वर्ष 2008-09 के लिए) व स्वः निर्धारण कर (वित्तिय वर्ष 2007-08 के लिए) आपको दिए जा रहे हैं। मैं यह विश्वास दिलाना चाहता हूँ कि मैं अप ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e addition in question without citing any cogent reason for not relying on the son's statement on oath by observing as under in the assessment order: "The fact that this purchase of plot was made out of funds available outside the books of assessee and is not reflected in the surrendered income as per the revised return of the assessee, the same is added to the income of the assessee." Ld. AO conveniently lost sight of the fact that impugned investment was owned by son by a sworn statement which for all purposes remains uncontroverted on the record. This material and clinching fact cannot be ignored or brushed aside. If son has admitted the income there is no reason why assessee will also offer it as his income. There is no merit in ld. AO's holding that assessee has gone back on his statement, it is a patently erroneous observation in these circumstances. Beside ld. AO has failed to substantiate that undisclosed investment is made by assesse based on any cogent evidence, reason or logic. 9.2 In the alternative, it is submitted that ₹ 9,38,50,009/- offered by the assessee for the year under consideration, the assessee has also offered additional income of ₹ 40,00,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat undisclosed investment is made by assesse based on any cogent evidence, reason or logic. 9.5 Since we are deleting the addition on merits, there is no necessity to adjudicate the alternative claim put forth by the assessee. The grounds raised by assesse in this behalf are accordingly allowed. Hence, revenue's appeal no. ITA/1042/11 is dismissed and that of assessee no. ITA/827/JP/2011 is allowed. Assessee appeal- ITA No. 104/JP/2014 - Consequential Penalty 271 (1) (c) 10.1 Main ground raised by the assessee is as under. 1. On the facts and in the circumstances of the case the ld. CIT(A) has grossly erred in confirming penalty of ₹ 11,02,544/- levied u/s 271(1)(c) of the I.T. Act, arbitrarily. 10.2 We have heard both the parties and perused the material available on record. The penalty in question has been imposed qua the addition sustained by the ld. CIT(A). Since we have deleted the impugned addition, therefore, no penalty is imposable. The same is deleted, assessee's ground in this behalf is allowed. Hence this appeal no. ITA/104/JP/14 of the assessee is allowed. 11.0 In the result the appeals of the assessee bearing ITA No. 827/JP/2011 and 104/JP/2014 are allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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