9911796707
TMI Blog2021 (5) TMI 651X X X X Extracts X X X X X X X X Extracts X X X X ..... etails of sales have been filed. Since the assessee is registered under the Value Added Tax all these details of sales are filed before VAT authorities and the invoice up to the date of survey were examined by the survey team. Thus going through the above details of trading account for the period 01.04.2015 to 15.12.2015, we find that the quantity details filed by the assessee with regard to the opening stock purchase sales and closing stock are correct and are duly supported by material evidence and thus should be accepted in place of the oral statement given by the partner during the course of survey. Therefore the excess stock of gold jewellery at the time of survey was only at 108.732 grams and not the alleged figure of 5770.960 grams. Therefore no addition for excess gold jewellery was called for. Excess silver jewellery - As details of purchase and sales has not been confronted by the revenue authorities at any stage. Sales are subject to VAT, Invoices have been issued which were verified during survey and assessment proceedings. Under these facts in our considered view the Evidence needs to be given preference to the 'oral' statement given by the partner of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above captioned appeal filed at the instance of the assessee for Assessment Year 2016-17 is directed against the order of Ld. Commissioner of Income Tax(Appeals)-I (in short 'Ld. CIT], Bhopal dated 17.10.2019 which is arising out of the order u/s. 143(3) of the Income Tax Act 1961 (In short the 'Act') dated 26.12.2018 framed by DCIT/ACIT, Itarsi. 2. Assessee has raised following grounds of appeal:- 1. On the facts and circumstances of the case and applicable law, Ld. CIT(A)-I, Bhopal erred in dismissing the appeal and sustaining the assessment order of the Ld. A.O. under this appeal which is contrary to the material on records and provisions of the Act, unjust, bad in law and without jurisdiction. 2. On the facts and circumstances of the case and applicable law, Ld. CIT(A)-I, Bhopal erred in sustaining the addition of ₹ 1,59,19,451/- made by the Ld. AO on account of unexplained stock of gold and silver jewellery disregarding the facts of the case, settled legal position and explanation submitted by the appellant. 3. On the facts and circumstances of the case and applicable law, Ld. CIT(A)-I, Bhopal erred in dismissing the appeal and sustaining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e course of survey was made under stress and the discrepancies were only to the extent of ₹ 11,04,901/- which had already been offered in the return of income filed on 16.02.2016. Subsequently the case of the assessee was selected for in Compulsory Manual Selection and notices u/s. 143(2) and 143(1) of the Act served. During the course of assessment proceedings Ld. A.O. confronted assessee why the income of ₹ 1,75,00,000/- surrendered during the course of survey has not been offered to tax. Detailed reply was submitted by the assessee contending that the surrender was made under stress and after necessary reconciliation and examining the records only discrepancy was for ₹ 11,04,901/-. It was also contended that statement given during the course of survey are not on oath and thus do not have any evidential value. However these submissions could not satisfy the Ld. A.O. and he completed the assessment assessing income at ₹ 1,75,40,496/- in the following manner:- Income as per return ₹ 11,45,390/- Addition on account of undisclosed stock u/s 69B ₹ 1,70,24,352/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal. 7. Ld. Counsel for the assessee argued at length referring to the written synopsis as well as the paper book running page 1 to 69 and also stock details and VAT returns filed with the written synopsis from page 6 to 19. The written submission filed by the assessee are reproduced below:- SYNOPSIS Business: Trading in Gold and silver jewellery Survey: 16.12.2015. Income surrendered and later retracted is as under: Chart 1 Head of Disclosure Amount surrendered during survey (By partner Arun Gothi) Amount retracted subsequently vide retraction letter dt. 03.06.2017 (PB 7-8) Amount offered in return dated 16.02.2017 (PB 9-11) Excess Cash 3,75,510 3,75,510 - Excess gold jewellery 1,41,38,852 [5770.96 grams x ₹ 2,450 per gram] 1,38,72,459 [5662.228 grams x ₹ 2,450 per gram] 2,66,366 [108.732 grams x ₹ 2,450 per gram] Excess Silver jewellery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jewellery 20,46,965 [70.585 kgs x ₹ 29,000 per kg] (A) Excess Gold Jewellery Found - ₹ 1,38,72,459/- (a) The details of quantity of excess stock of gold jewellery found is as under: - Chart 3 Particulars Gold Jewellery physically found Gold Jewellery as per books Excess gold jewellery As per Id AO 20,689.200 grams 14918.240 grams 5770.960 grams As per assessee 20,689.200 grams 20580.468 grams 108.732 grams * * This excess gold Jewellery has already been offered In the return u/s. 139. (b) During survey, it was stated by the survey party that the stock of gold jewellery (as on 15.12.2015) as per the books of accounts was 14918.240 grams. PB 4 que. 12. No basis as to how this quantity of 14918.240 grams was determined by the survey party, has been brought on record. (c) The correct stock of gold jewellery, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excess silver jewellery As per Id AD 236.500 kgs 137.000 kgs 99.50 kgs As per assessee 236.500 kgs 207.585 kgs 28.915 kgs * * This excess silver jewellery has already been offered in the return u/s. 139. (b) During survey, it was stated by the survey party that the stock of silver jewellery (as on 15.12.2015) as per the books of accounts was 137 kgs. PS 5 que. 13. No basis as to how this quantity of 137 kgs was determined has been brought on record. (c) The correct stock of silver jewellery, as per books, was 207.585 kgs. This quantity of jewellery is duly verifiable. (i) The trading account of silver - PS 58 clearly shows the quantitative details of opening stock, purchases, sales and closing stock on 15.12.2015. (ii) So far as the opening stock of 171.461 kgs on 01.04.2015 is concerned, the same is verifiable from - the quantitative trading account as certified by the auditor. PS 36. - Form - 8 (Le. stock certificate) submitted to VAT department. PS 37. - Assessment order u.s. 143(3) f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and merely based the entire addition on the mere surrender during survey and nothing else. It is therefore prayed that the appeal of the assessee may kindly be allowed. 8. Per contra Ld. Departmental Representative apart from relying the finding of both the lower authorities also submitted that the quantity referred by the Ld. A.O. as per the books of accounts were mentioned by the partner of the firm only during the course of survey. Ld. Departmental Representative referred to the statements given by the assessee during the course of survey to support the fact that the basis of surrender was the quantity as per books mentioned by the partner of the assessee firm the onus is on the assessee firm to explain why there was a difference between the stock as per books mentioned by the partner during the course of survey vis-a-vis the stock shown in the books which were produced before the Ld. A.O. during assessment proceedings. He further contended that the statement during the course of survey was not given under any duress and the retraction was also after a lapse of considerable time which in this case is almost 18 months. 9. We have heard rival contentions and perused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or thrust has been only on the statement given by the partner during the course of survey accepting to offer ₹ 1,75,00,000/- as undisclosed income. Even Ld. CIT(A) has only taken the statement as the basis treating to be a statement on oath which in his view the assessee was duty bound to honour and offer surrendered income to tax. No efforts seems to have been made to examine the incriminating material if any, to verify the correctness of various quantity details and abstract of books of accounts filed by the assessee. Nothing adverse has been observed in the order of both the lower authorities against the quantitative details, Trading and Profit Loss Account details of purchase and sales and the audited financial statements. 13. First issue which needs to be examined is whether the statement given during the course of survey u/s. 133A of the Act is a statement on oath having any evidential value . 14. We find that this issue is time and again examined by the Hon'ble Apex Court. In the case of CIT V/s S. Khadar Khan Son (2012) 25 taxmaan.com 413 (SC), Hon'ble Apex Court has dismissed the special leave petition filed by the Department observing the same to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontradistinction to the power under section 133A. section 132(4) of the Income-tax Act enables the authorised officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the Income-tax Act. On the other hand whatever statement is recorded under section 133A of the Income-tax. Act it is not given any evidentiary value obviously for the reason that the officer is not authorised to administer oath and to take any sworn statement which alone has evidentiary value as contemplated under law ... Therefore, the statement elicited during the survey operation has no evidentiary value and the Income-tax Officer was well aware of this. (emphasis supplied) 15. Hon'ble High Court of Gujarat in the case of Commissioner of Income-tax, Rajkot-III v. M.P. Scrap Traders [2015] 60 taxmann.com 205 (Gujarat) has affirmed the decision of ITAT deleting the addition made by the AO solely on the basis of statement of partner which was subsequently retracted. Head note of the above decision is as under: Section 69, read with section 133A, of the Income-tax Act, 1961 -Unexplained investments (Retraction of statements) - Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f survey at ₹ 1,75,00,000/- and offer it to tax finds no merit. 18. Now coming to the submissions made by the assessee that the retraction was correct and as per the records only ₹ 11,12,901/- needs to be offered to tax is to be examined. 19. First issue is with regard to excess gold jewellery found which has been raised in Ground No. 2. The addition for excess gold jewellery was made at ₹ 1,38,72,459/- for the alleged excess gold jewellery of 5662.228 grams @₹ 2450/- per gram. Addition for excess silver jewellery was at ₹ 20,46,965/- for excess stock of 70.585 Kg @₹ 29,000/- per kg. 20. The alleged excess stock of gold jewellery as per the Ld. A.O. and as per the assessee is computed below:- Particulars Gold Jewellery physically found Gold Jewellery as per books Excess gold jewellery As per Ld.AO 20,689.200 grams 14918.240 grams 5770.960 grams As per assessee 20,689.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ams details of sales have been filed. Since the assessee is registered under the Value Added Tax all these details of sales are filed before VAT authorities and the invoice up to the date of survey were examined by the survey team. Thus going through the above details of trading account for the period 01.04.2015 to 15.12.2015, we find that the quantity details filed by the assessee with regard to the opening stock purchase sales and closing stock are correct and are duly supported by material evidence and thus should be accepted in place of the oral statement given by the partner during the course of survey. Therefore the excess stock of gold jewellery at the time of survey was only at 108.732 grams and not the alleged figure of 5770.960 grams. Therefore no addition for excess gold jewellery at ₹ 1,38,72,459/- was called for. 23. As regards addition for excess silver jewellery at ₹ 20,46,965/-, we have gone through the trading account for 01.04.2015 to 15.12.2015 placed at page 58 of the paper book. Figures of opening stock of 171.461 kg is not in dispute. Closing stock is shown at 207.585 kg. Physical stock was found at 236.500 kg but shown in books of accounts is 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Representative could not controvert this fact by placing any contrary material. Since there is no excess cash as on the date of survey we hereby delete the addition made of excess cash of ₹ 3,75,510/- made by the Ld. A.O. Thus Ground No. 3 of the assessee's appeal is allowed. 25. Now we take up Ground No. 4 for the addition of ₹ 1,00,145/- made by the Ld. A.O. on account of unexplained expenditure. We observe that ₹ 1,00,145/- was part of the surrender of ₹ 1,75,00,000/- made during the course of survey. Admittedly no incriminating material was found with regard to any unaccounted expenditure nor the Ld. A.O. has referred any such incriminating material in the assessment order. Ld. CIT(A) has also not referred to any such material found during the course of survey showing any proof of unaccounted expenditure not accounted for in the books. Under these given facts it is blatant that the alleged addition of ₹ 1,00,145/- for unexplained expenditure u/s. 69C is based merely on the statement made during the course of survey which has no evidentiary value and thus this addition of ₹ 1,00,145/- could not stand for and the same is deleted. Thus G ..... X X X X Extracts X X X X X X X X Extracts X X X X
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