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TMI Blog2017 (12) TMI 988X X X X Extracts X X X X X X X X Extracts X X X X ..... e on record which in the instant case are missing. We also find that the statement recorded during the survey proceedings u/s. 131 of the Act does not have any evidentiary value. Therefore, the same cannot be used as a basis for making such addition. The materials found in the course of survey could not be the basis for making any addition in the assessment. The word “may” used in section 133A(3)(iii) makes it clear that the material collected and statement recorded during the survey u/s 133A are not conclusive piece of evidences by itself. - Decided in favour of assessee. - ITA No.1020/Kol/2014 - - - Dated:- 10-11-2017 - Shri Waseem Ahmed, Accountant Member And Shri S.S.Viswanethra Ravi, Judicial Member For The Appellant : Shri S.L. Kochar, Advocate Shri Anil Kochar, Advocate For The Respondent : Shri Saurabh Kumar, Addl. CIT-DR ORDER PER Waseem Ahmed, Accountant Member:- This appeal by the assessee is against the order of Commissioner of Income Tax (Appeals)-XXXVI, Kolkata dated 31.03.2014. Assessment was framed by ACIT, Circle-Murshidabad u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) vide his order dated 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tever I shall speak the truth and nothing but the truth. Sd/- Alauddin Biswas 29.3.10 Oath taken by Alauddin Biswas 29.03.2010 Oath give by Q. No.1 Please identify yourself? Ans I am Sri Alauddin Biswas s/o Sri Siddique Biswas, director of M/s Kalpana Biri Mfg Co. (Pvt) Ltd, residing at Collegepara, P.O. Aurangabad, Dist. Msd, aged about 46 years. Q. No.2 You have stated that there are two other unit in Malda 7 Omarpore. You also informed that there are two godowns outside of Aurangabad unit at Collegepara near by the mfg. unit Aurangabad) and at Dafahat, Do you have any other unit or godown. Ans. 2 We don t have any other unit or godown in Murshidabad. We have only sale unit in Delhi Pandua (Hooghly). Q. No.3: Total cash founds in your business premises (Aurangabad) is ₹ 14,96,160/- but as per cash book one cash balance ₹ 15,64,765/- on 28.9.10 why the diff. arises. Ans 3: We have expended the diff. money i.e. ₹ 68,606/- for expenses during today i.e. on Q. 4: Give the closing stock of biri and major raw material as biri leaves and tobacco bill date. Ans. Sir, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 53 pkt x 31680 16,79,040 43546 Total 6,60,72,000 Above mentioned valuation (physical) is done in front of your employee as you stated and mentioned as employed. Are you satisfied with the above valuation and diff. arisen due to mis value with your answer. Ans 5: Sir, I am stated with valuation made by Survey team as it is taken in front of me on my employee. But I am not sure with the diff. of stock taken by Survey team and my stock register. Q. 6: As you said that you are not sure about the difference arises due to physical valuation made by survey team. Should we again physically value your stock in front of you. Ans.6 : No, Sir, at is not required. Q. 7: What is the average market rate of tendu leaves, tobacco biri Ans 7: Sir, average market rate of tendu leaves, tobacco, biri are as following:- Tedu leave Rs.95 pr kg Tobacco Rs.128 per kg Biri Rs.210 per 1000 strokes Q. 7: Stock diff. as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n as detailed under:- a) The survey was conducted at the Aurangabad factory of the assessee only but there were two more branches of assessee as disclosed but no survey was conducted at other branches. Thus, no physical inspections of the stocks lying on the branches were carried out by survey team. b) No discrepancy of whatsoever has been pointed out by the survey team in the books of account of assessee. Therefore, there is no question of any under valuation of closing stock which is not recorded in the books of account. c) The statement u/s 131 of the Act was recorded under coercion. The assessee was forced to make the payment of tax for ₹ 1 crore by 31.03.2010. d) The assessee immediately applied for the certified copy of the statement given during survey proceedings on 07.04.2011 and paid the prescribed fees vide cheque No. 65213 dated 07.04.2010 BSR code 0510308 for ₹ 1,000/-. But the same was not supplied to the assessee. The assessee further applied for the certified copy of the statement given u/s 131 of the Act vide application dated 14.03.2012 after making the prescribed fees of ₹2,000/-. However, assessee was given the certified copy of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thought necessary) was also prepared, placed marks of identification on the books of account or other documents and out of that list some of the books of account were impounded under section133A(2)(ia) of the Income Tax Act, 1961. f) All the books of account, cash inventory, inventory of Books of account were duly signed by me, one of the director of the company. g) I also furnished such information / statement as the survey team required under section 133A of the Income Tax Act, 1961. 3. That the Survey Team did all the work at the our Company s Aurangabad Factory only. None of the members of the Survey Team paid physical visit to the other two branches or our company namely Omarpur Branch and 16 Mile Malda Branch where stocks were also held and therefore no actual physical inspection of these stocks were done by the Survey Team at these branches. 4. Since the start of the Survey operation till the closure of the same I, Alaudding Biswas and all the staff members of our Company were co-operative and offered all assistance to the survey team. No discrepancy in any of the accounts and documents was detected. No documents or valuables were recovered from prem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed my mental and physical strength and broke down. At about 11 p.m. I put my signature mechanically wherever the authorized officer directed to get rid of this most pathetical and humiliating situation. 8. After signing the alleged statement claimed to have been taken under section 131 of the Income Tax Act, 1961, the authorized officer delivered me two notices u/s 131 after signing thereon and graciously said that he had considered my submission and for this ₹ 1 Crore would not be required to be deposited by 31/03/2010. Only ₹ 50,00,000.00 would be required to be deposited by 31/03/2010 and theist amount of ₹ 50,00,000.00 required to be deposited in two installment of ₹ 25,00,000 each on 30/04/2010 and 30/06/2010 respectively and for this, two cheque of ₹ 25,00,000.00 each of aforesaid date required to be paid as security. The Authorized Officer also directed me to appear at Income Tax Office, Berhampore on the next day with the said post dated cheque and all other books of accounts which they were not able to carry with them. 9. On 30/04/2010, I appeared at Income Tax Office, Berhampore with two post dated cheque of ₹ 25,00,000.00 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of the Income Tax Department as per instruction of the then Ld. ACIT, Circle Murshidabad. The Ld. ACIT Murshidabad ultimately ordered for stop collection of rest amount of ₹ 25,00,000.00 which was due to be paid on 30/06/2010 against the above stated security in the form of Bank Cheque with blank date with a commitment that if after assessment, demand arises, that will be recovered through that cheque. 15. On 29/09/2010 your assessee company fled the return of income for Assessment Year 2010-2011 (related to financial year 2009-2010, in which the survey was conducted) and that return has been selected for scrutiny assessment. 16. Our company further prayed for certified copy of order sheet, alleged deposition claimed to have taken u/s. 131 signature on which was taken under duress, deposition under section 133A etc by further depositing fees of ₹ 2000.00 ( vide Ch. No.51961 BSR. Code No.0510308 dated 01/03/2012 ) and on 14/03/2012 your assessee company has received the certified copy of the above stated documents and come to know the materials of the deposition claimed to have taken under section 121 of the Income Tax Act, 1961, signature on which wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act that there was under valuation of closing stock. The delay in filing the retraction statement occurred due to the fact that the revenue did not provide the certified copy of the statement. v) The survey team did not visit to other branches of assessee and therefore the physical stock of those branches cannot be relied upon. The physical stock statement was neither signed by any store keeper nor it was prepared in presence of any person. Therefore, the valuation of alleged suppressed stock is without any basis. vi) The assessee in its statement u/s. 131 of the Act has clearly stated in question No.5 that he is not sure with the difference of the stock taken by the survey team vis-a-vis stock register. The director of the assessee-company fully co-operated during survey proceedings and produced all the necessary books of account including the stock register to the survey team but no defect of whatsoever has been pointed out by them. The statement taken u/s. 133A of the Act does not allege any suppression of stock. After considering the submission of assessee Ld. CIT(A) confirmed the order of AO by observing as under:- 7.0 Appellant s submission and facts availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 / 133A wherein the assessee admitted the suppression / under value of closing stock and agreed for the addition of the impugned amount. However, the assessee did not offer the amount of suppressed stock as income in its return filed u/s. 139(1) of the Act. Therefore, AO made the addition to the total income of the assessee on the basis of discrepancy observed in the stock as discussed above. The view taken by the AO was subsequently confirmed by Ld. CIT(A). However, we find that the orders of Authorities Below suffer from several infirmities as detailed under:- a) The survey team has not visited to the other branches of assessee as discussed above. Therefore, the information about the availability of physical stock on the date of survey collected by Revenue during the survey proceedings cannot be relied. It is because the revenue failed to discharge the duty as it did not visit to the other branches of assessee to find out the discrepancy between the physical stock as well as stock declared in the books of account. Therefore, the difference in stock recorded by revenue is not reliable; b) The addition has been made on the basis of statement recorded u/s. 131 of the Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forded them the necessary facility to check and verify the cash stock of raw materials and finished goods and other valuable articles or things which were found in the Company s Aurangabad factory. Therefore, we hold that Revenue has no jurisdiction to resort the powers under subsection (1) (2) of Section 131 of the Act while surveying the accounts of assessee u/s. 133A of the Act. It is because, in the instant case the assessee neither refused nor evaded with the competent authority. In this regard, we find support and guidance from the Hon'ble jurisdictional High Court in the case of Dr. Vijay Pahwa vs. DCIT reported in 250 ITR 354 (Cal) wherein the relevant extract of the judgment is reproduced below:- Summons can be served under section 131(1) only in case of obstruction by the person concerned or when some sort of hindrance is put up by him. In the instant case the summons was immediately executed on the same day within 30 minutes or so. There are other powers for search and seizure. There are other powers for reopening of computed assessments. These were not utilized. Under the garb of conducting a simple survey under section 133A, books were seized witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain Vikash Marg, Laxmi Nagar, Delhi-92 Q. No.4: On your accounts it is seen that there is two divisions named (1) KBM Electronics (2) Kalpana Digital World exist, what are the legal provision and business of these units? A.4: These are the sister concern of M/s Kalpana Biri Mfg. Co. (Pvt) Ltd. And profit of those units are merged with the profit of the company. Both the units are carrying on electronics business. Q.No.5 What are the books of accounts are maintained by you? A.: Cash book, ledger, stock registers of all raw materials, sales register, production register etc. are maintained manually. Q.No.6: Give the details of cash in hand and bank balance? A.6: Cash in hand would be approx. 15 lakhs and OD balance approx. 2 crores. Q.No.7 Explain the modus of operendi of your business and labour payments? A.7: Raw materials are purchased directly from markets, distributed through medium of Munshi amongst the Home workers who are directly engaged by the company. We deduct the TDS from the payment to Munshis, we also regularly deduct the PF from the payments of Home workers. At this time total labour working in three units are 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fluence. 3. In view of the above, while reiterating the aforesaid guidelines of the Board, I am directed to convey that any instance of undue influence/coercion in the recording of the statement during Search/Survey/Other proceeding under the IT Act, 1961 and/or recording a disclosure of undisclosed income under undue pressure/coercion shall be viewed by the Board adversely. From the above circular it is amply clear that the CBDT has emphasized to its officers to focus on gathering evidences during search/survey operations and strictly directed to avoid obtaining admission of undisclosed income under coercion/ undue influence. Keeping in view the guidelines issued by the CBDT from time to time regarding the statements obtained during search and survey operation, it is undisputedly clear that the lower authorities have not collected any other evidence to prove the impugned under valuation of stock other than the statement. Therefore under such facts circumstances we are inclined to reverse the order of authorities below. 7.2 We also note that had there been any difference between physical stock and stock declared in the books of assessee then AO should have rejected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s received the certified copy of the above stated documents and come to know the materials of the deposition claimed to have taken under section 131 of the Income Tax Act, 1961, signature on which was taken under duress, is full of facts and figures which are not true. xxxxx 7.3 It was also observed that the CBDT vide File No.414/105/2008-IT-(InV1) has directed to its officers to record the proceedings during survey in specified format. The relevant format for recording inventory is reproduced below:- V Inventory of stocks found during the course of survey carried out on (date of survey) In the case of M/s _________________ at (address) ________ stock was found as under: S No. Description Quantity (in Nos./wt.) Value (in R s) Basis of valuation Remarks However, from the survey proceedings, we find that prescribed forma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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