9911796707
TMI Blog2013 (8) TMI 1021X X X X Extracts X X X X X X X X Extracts X X X X ..... e and had no value and also medicines with expiry which were to be discarded by the assessee have also been included in the list. The value thereof, could not be included for determining unexplained investment in stock. In this view of the matter, we set aside this issue to the assessing authority so that the assessee can demonstrate his claim for exclusion of value of such items of stocks for sustaining only the resultant addition, if any, as his undisclosed income. Disallowance of remuneration to the partners - addition on the ground that the interest income cannot be a subject matter of deduction under section 40(b) - Held that:- The perusal of material reveals that the amount of ₹ 31,711/- is a journal entry by which the assessee reversed the excess amount of bank interest charged. This has gone to reduce the expenses charged under the head Bank Interest and charges. The resultant income has also been assessed as income from business. This amount of ₹ 31,711/- is not shown to have been assessed as assessee’s income from other sources. We, therefore, do not find any justification in excluding such amount for making disallowance of ₹ 12,685/- under section 40 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Radhey Shyam Mittal (husband of another partner Smt. Sarda Mittal). The income, however, was not reflected in the return of income filed on 29.09.2009. The Ld. Assessing Officer in last of para held that statement taken during the course of search has great evidentiary value and the retraction can be treated valid only when the coercion has been proved. The fact that the assessee retracted his statement after a lapse of seven months, is nothing but an after thought. If he was perturbed of the coercion committed by the IT Authorities, he could have retracted his statement within a few days or week s time and not after elapse considerable time. Also the assessee has failed to discharge the onus of proving that coercion was used while recording the statements. The Ld. Assessing Officer mentioned that the department has seized Annexure A-1 to A-13 from the premise of the assessee and on the basis of these documents an income of ₹ 27,15,292/- has been offered to tax in return filed by Shri Praful Mittal and ₹ 1,59,195/- in the hands of Shri Murari Lal Mittal. After taking into consideration the totality of the facts and circumstances of the case the income offered in the sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r details of the firm and companies and verification of Profit Loss account and documents only. In his reply the assessee gave an uncertain and vague reply of undisclosed income of ₹ 20-25 lacs. No documentary evidence was found as a result of search from which it could be discerned that the assessee has transacted any business outside the books maintained in the normal course of business. The statement by Shri Radhey Shyam Mittal, husband of one of the partners Smt. Sarda Mittal is statement by the stranger and is not binding on the appellant firm. In the absence of any documentary evidence revealing undisclosed income, the assessee was under good faith that the statement so made will not be used against him. The appellant, however, has been making repeated requests to the authorized officer as well as the assessing authority to give copies of the statements recorded under section 132(4) of the Act. It is as late as on 13.3.2009 the copy of statement was provided. This fact is evident from the assessee s paper book page 203. Immediately after receipt of statement, the assessee retracted the statement on 31.3.2009 by filing affidavit to this effect. This affidavit is placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f his income for ₹ 25 lacs. The husband of another partner Smt. Sarda Mittal also confirmed the said admission and surrender. Shri Radhey Shyam Mittal, the husband of lady partner is an interested party and is an educated person. The admission made by him is counter signed by his wife Smt. Sarda Mittal and this fact is revealed from assessee s paper book pages 89 to 92. The assessee has not made retraction well in time. The Pune Bench of the Tribunal in the case of Hotel Kiran, 82 ITD 453 (Pune) has discussed elaborate circumstances under which a valid retraction can be made. This retraction, however, does not meet such circumstances. The Assessing Officer at internal page 3 of the assessment order has made elaborate discussion about cash generation with the appellant. Even the Panchnama placed at assessee s paper book page 18 reveals that there are 13 listed items which give rise to the undisclosed income. Since the retraction is not valid and there are material on the basis of which the authorities below have acted, the addition cannot be deleted on the basis of a self serving affidavit filed by the assessee. It, therefore, has been contended that the ground raised in appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affidavit has carefully been perused. After the affidavit was filed before the assessing authority, he remained silent on the face of it and carried no enquiry thereon to verify the correctness thereof. The assessee was also not cross examined on the point of retraction nor was required to produce any documentary evidence or any other evidence. The assessee was, therefore, entitled to assume that the income tax authorities were satisfied with the affidavit as sufficient on this point. The Hon'ble Allahabad High Court in the case of Sohan Lal Gupta vs. CIT, (1958) 33 ITR 786 (All.), as was also put to the parties during the course of argument, has made elaborate discussion on the evidentiary value of the affidavit. The relevant passage from the aforesaid judgment at page 791 of the report is reproduced as under :- The most important points on which the Tribunal relied, is that mentioned at No. 2, viz., that, according to the Tribunal, the assessee had not satisfactorily established that the shares had to be sold as the purchaser of the Jaswant Sugar Mills was not willing to purchase that mill unless the shares in the Straw Board Mills Ltd. held by the family were also transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale and purchase of medicines that could give rise to the income to the extent of ₹ 25 lacs, the addition merely on the basis of such statement which stood validly retracted could not have been made. We, therefore, find no factual or legal justification in sustenance of addition by Ld. CIT (A) in this regard. 8. Ground No. 2 not pressed. 9. In Ground No. 3, the Ld. CIT (A) has confirmed the addition of ₹ 79,928/- on account of alleged excess stock of medicines found at the time of search. 10. We have heard parties and have perused the inventory of stock placed at assessee s paper book pages 22 to 67. The inventory so found reveals that some of the medicines which were sample and had no value and also medicines with expiry which were to be discarded by the assessee have also been included in the list. The value thereof, could not be included for determining unexplained investment in stock. In this view of the matter, we set aside this issue to the assessing authority so that the assessee can demonstrate his claim for exclusion of value of such items of stocks for sustaining only the resultant addition, if any, as his undisclosed income. 11. Ground no. 4 in ..... 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