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TMI Blog2019 (12) TMI 1201X X X X Extracts X X X X X X X X Extracts X X X X ..... k and that assessee has re-calculated the difference and tuly declared the same in the returned filed by him. The Ld. CIT(A) has erred in confirming action of the Ld. AO making adhoc addition of Rs. 2,33,227/- in the net profit." 3. Brief facts as culled out from the records are that the assessee is dealer in iron and steel scrap in the trade name of M/s Fairdeal Steel. Return of income was filed declaring total income of Rs. 52,27,800/- on 30109/2012. The books are audited and Audit Report along with TAR was filed. A Survey u/s 133A was carried out on the business premises of the appellant on 12/07/2011. During the survey proceeding i.e. on 12/0712011 the value of physical stock found was of Rs. 1,35,79,761.36 whereas as per books of accounts the value of stock was calculated at Rs. 18,79,761.36. Therefore, at that time a difference of stock to the tune of Rs. 1,17,00,000/- was observed. Further, on the date of survey difference in cash as per books and cash physically found excess to the tune of Rs. 8,00,000/- and unaccounted purchase found to the tune of Rs. 3,36,150/-. 4. The case was selected for scrutiny. Consequently, assessment proceedings started by serving of notices ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucceed. Now assessee is in appeal before the Tribunal. 7. Ld. counsel for the assessee referring to the written submissions placed before lower authorities submitted that the entire physical stock found on the date of survey, i.e. 250.703 MT, was sold off separately. Thus, the excess stock on the date of survey was of 165.27 MT only and in terms of value, the same has been declared as income. Therefore, it is requested that excess stock calculated as above may please be considered instead of excess stock calculated on the date of survey. Further, the assessee could not point out these discrepancies to the AO immediately after survey proceedings because the details of stock taken on the date of survey was not provided immediately to the appellant and that exact quantity could be known only on disposing of stock, kept separately to determine difference in the stock found on the date of survey. 8. During the course of survey proceedings note-pad was found and it was concluded that entries appearing therein represent unaccounted purchases made by the assessee. The total of amount written in the notebook has been calculated at Rs. 1,20,36,150/- The Assessing Officer has not taken corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of Rs. 84,00,000/- on account of excess stock surrendered during the survey proceedings. A survey u/s 133A was carried out at the business premises of the appellant on 12.07.2011. During the course of survey physical stock of Rs. 1,35,79,761.36. Therefore, there was excess stock of Rs. 1,17,00,000/- on the day of survey. During the course of recording the statement the appellant has surrendered the above excess stock as additional income. While filing the return of income the appellant has disclosed income of Rs. 33,00,000/- as additional income on account of excess stock. Therefore, the appellant has not disclosed the income of Rs. 84,00,000/- while filing the return of income. The appellant furnished the explanation regarding the short disclosure shown while filing the return of income during the course of assessment proceedings as well as appellate proceedings. As regards to the evidentiary value of the disclosure statement. Section 17 to 31 of the Indian Evidence Act, 1872 deal with admission. As defined in section 17, it is a "statement (oral or documentary or contained in electronic from) which suggests any inference as to any fact in issue or relevant fact, and whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statement unacceptable. The burden lay on the assessee to establish that the admission made in the statement at the time of survey was wrong and in fact there was no additional income. This burden does not even seem to have been attempted to be discharged. Thus, it is a clear and settled law that admission by a person is good piece of evidence though not conclusive and the same can be used against the person who makes it. The reason behind this is a person making a statement stops the opposite party from making further investigation. However, the statement is not conclusive and the person giving the statement can retract the same under certain circumstances. (i) The first circumstances if where the statement is not given voluntarily but it was obtained under coercion, threat or undue influed. But the burden is upon the person making the statement to prove that the statement given by him was not voluntary. The assessee can discharge this burden by giving a direct evidence of coercion or threat by the Authorised officer or by circumstantial evidence in this regard. The time gap between the statement and the retraction of statement should also one of the important points to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his voluntary statement, as an afterthought. Claims have to be discarded as the assessee has not produced any evidence in that behalf. Once the statement of the assessee is voluntary and there has been no pressure, the same is binding on the assessee. In the case of Council of Institute of Chartered Accountants of India vs. Makesh R. Shah (2004) 186 CTR (Guj) 579, the High Court of Gujarat has held that " a retraction so as to dislodge the admission made should come about at the earliest point of time. It goes without saying that a retraction made after a considerable length of time, would not have the same efficacy in law as a retraction made that earlier point of time from the day of admission. A belated retraction would fall in the category of afterthought instead of being retraction that apart, for a retraction to be effective so as to dislodge the admission made earlier in point of time, the retraction has to be supported by contemporaneous evidence and the onus is on the person making such admission and retraction." Thus, the legal position about the assessee's belated retraction is clear that it is an afterthought. Thus, from the above analysis it emerges that; i. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land with the assessee unit is 10,000 sq. ft. as allotted by the Development Authority, Ujjain on which besides open area, godown, factory Building and works shop erected. The space available for storing of stock is approx. 6000 Sq. ft. The nature of scrap stock, in terms of size & placing, is also haphazard. It is practically not possible to store 617.183 MT of scrap stock of haphazard shape in approx. 6000 sq. ft. area. Besides this stock, scrap of PVC (high volume with low weight covering major area of available space) pertaining to wife's concern Mis Saif Enterprises, weighing 30.767 MT was also lying. This fact was recorded in the statement and verified by the survey team "during the survey operation. 13. Ld. counsel for the assessee also contended that it was the duty of survey party to get the actual weighment of stock found during the course of survey proceedings, which was not done. It is at all not possible that exact 15MT in 12 Trucks; 13MT in 15 trucks; 13.5MT in 13 trucks; 11.4 MT in 6 trucks of scrap can be loaded in the trucks. Even otherwise, looking to the nature of scrap of variety, at the same time each truck could not be loaded by net weight of 15MT. It ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... survey on the basis of which unrecorded stock of Rs. 33,00,000/- is offered to tax are mentioned below:- (Quantity in M.T.) ::. Period Opening Stock Purchased Sold Closing Stock 1.4.2011 to 12.07.2011 (Date of Survey) 134.034 312.975 361.576 85.433 13.07.2011 to .) 1.03.2012 85.433 Not Applicable 250.703* -165.27 As per date wise/party Wise list given hereunder: SR XO DATE QTY . NAME OF PARTY 1 7/16/2011 16185 Suprem Industrial Corporation Punjab 2 7/20/2011 17085 B K Traders Indore 3 7/20/2011 16620 Suprem Industrial Corporation Punjab 4 7/29/2011 18350 Hindustan Steel Indore 5 8120/2011 16505 Saini Foundry Jaipur 6 8/2212011 24960 Saini Foundry Jaipur 7 9/9/2011 14980 S. D. Bansal Iron & Steel Pvt Ltd Mandideep 8 9/14/2011 18175 Raishree Steel Mandi Govindgarh 9 10/12/2011 15470 BK Traders Indore 10 11/24/2011 15080 Dhanlaxmi Ujjain 11 12/16/2011 18875 Nobale Matel Alloys Pvt. Ltd. Jaipur 12 1/29/2012 17860 Rajshree Trading Co. Jaipur 13 2/7/2012 18180 Him Alloys & Steel Pvt. Ltd. Amb 14 3/5/2012 4895 Sunny Enennering Works Ujjain 15 3/19/2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught fit and necessary to confer such power to examine a person on oath, the same has been expressly provided, whereas section 133A does not empower any ITO to examine any person on oath. Statement recorded under section 133A is not given any evidentiary value obviously for the reason that the officer is not authorized to administer oath and to take any sworn in statement which alone has the evidentiary value as contemplated under law. Therefore the statement elicited during the survey operation has no evidentiary value. Similar view is taken in CIT vs. S. Khader Khan songs (2008) 300 ITR 157 (mad) [SLP filed by the department dismissed -210 Taxman 248/254 CTR 228(SC). 21. We find that in the case of Ashok Hanilal Thakkar vs. ACIT-279 ITR 143 (I.T.A.T.-AHM) No addition in come on the basis of disclosure could be made where the assessee had retracted certain income after disclosing it and no material had been found to prove this income during the survey. 22. Hon'ble Bombay High Court in the case of Chawla Brothers (P.) Ltd. vs. ACIT (20 43 SOT 651 (Mum.)- held that merely on the basis that at the time of survey, some differences were found in stock did not mean that there woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not retracted the total surrender but he prudently kept separate record of the sales of physical stock which was 250.03 MT whereas the book stock on the date of survey was 85.433 MT. The difference i.e. 165.27 MT is accepted as unrecorded stock which has been offered to tax by the assessee. 26. We, therefore, in the given facts and circumstances of the case and respectfully following the decision referred hereinabove are of the considered view that Ld. CIT(A) erred in confirming the addition made by the Ld. AO for unrecorded stock of Rs. 84,00,000/- merely on the basis of recorded statement and without basis of any material evidence and there the same needs to be deleted. We, accordingly order so and allow ground no.1 raised by the assessee. 27. Apropos to ground No.2 relates alleged ad hoc addition of Rs. 2,33,227/- made by the Ld. AO for offering lower net profit stands confirmed by the Ld.CIT(A). 28. Ld. counsel for the assessee challenging this addition submitted as follows: 4. The Ld. AO has further made addition of Rs. 2,33,227/- observing that during the year under consideration the assessee has shown net profit of Rs. 5,79,048/- (Excluding surrendered amount during s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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