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TMI Blog2021 (7) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... fessions; as the case may be, made during the course of a search or survey does not carry any evidentiary value since it has to be only to the evidence collected only. We thus find no reason to interfere with the learned CIT(A) s impugned conclusion deleting substantive and protective additions in issue after appreciation all the facts considered in law of the CBDT circular(s) as well as various judicial precedents quoted at the assessee s behest. Its identical sole substantive ground in all these six cases fail therefore. - ITA No. 743/Hyd/18 & 752/Hyd/18, 747/Hyd/18, 748/Hyd/18, 749/Hyd/18, 750/Hyd/18 - - - Dated:- 25-6-2021 - Shri S.S.Godara, Judicial Member And Shri Laxmi Prasad Sahu, Accountant Member For the Assessee : Shri S.Rama Rao, AR For the Revenue : Shri Narayana Murthy Naik, Shri Rohit Mujumdar, DRs ORDER PER S.S.GODARA, J.M. : These six Revenue s appeals for AYs. 2013-14 and 2014- 15; assessee/seriatim-wise arise against the CIT(A)-Kurnool s separate orders dated 15-02-2018 (first assessee) and 21-02- 2018 in second to fifth taxpayers, passed in file Nos.017, 10410, 10409 10411, 10412 10413/CIT(A)/KNL/2016-17; appeal-wis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ements. Hence, the addition made is not legally correct. 5.The appellant is submitting the CBDT Circulars in toto relating to the relevant subject, which clearly states that admission of undisclosed income under coercion / undue influence is not binding on the assessee without proper evidences / material gathered during survey proceedings. C.B.D.T CIRCULARS Admissions of Undisclosed Income under coercion/pressure during Search/Survey F.No. 286/98/2013-IT (Inv.lI) Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes Dated- 18th December, 2014 To 1. All Principal Chief Commissioners of Income Tax 2. All Chief Commissioners of Income Tax 3. All Directors General of Income Tax (Inv.) 4. Director General of Income Tax (I CI), New Delhi Subject: Admissions of Undisclosed Income under coercion/pressure during search/Survey - reg. Ref: 1) CBDT letter F.No. 286/57/2002-IT(lnv.lI) dt. 03-07-2002 2) CBDT letter F.No. 286/2/2003-IT(lnv.11) dt. 10-03-2003 3) CBDT letter F.No. 286/98/2013-IT(lnv.11) dt. 09-01-2014 Sir/Mada ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they have been forced to confess the undisclosed income during the course of the search seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, on confessions during the course of search seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the income tax departments. Similarly, while recording statement during the course of search it seizures and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, assessing officers should rely upon the evidence's I materials gathered during the course of search I survey operations or thereafter while framing the relevant assessment orders. Yours faithfully, Sd/- [S.R. Mahapatra] Under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009-2010 2010-2011 30 197.404 23,18,610.00 - 3. 2010-2011 2011-2012 34 216.45 70,02,125.00 - 4. 2011-2012 2012-2013 - - - 5. 2012-2013 2013-2014 1 5.37 1,96,000,00 -- Total: 71 The appellant firm has disclosed the sales as per the sale deeds executed to the buyers in the relevant financial years. The income tax department has conducted survey operations on 02.12.2013 at the Registered Office of the firm at Kurnool and also at firms office, Tadipatri. The income tax officer has recorded pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid assessment year 2013-2014. Hence the addition of ₹ 2,00,00,000/- in the hands of the appellant is not justified and not valid in law. The appellant firm is referring latest CBOT circulars No. F.No. 286/98/2013-IT(INV./I) Dt. 18.12.2014 particularly clarifying on the admission of undisclosed income under coercion / pressure during search / survey. The Para No.3 of the circular clearly stated that 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 . The appellant firm is also referring another CBDT Circular No. F.No. 286/2/2003-IT(INV) that, dated 10.03.2003. Similarly, while recording statement during the course of search it seizures and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he hands of the appellant firm for the Asst.Year 2013-2014. SUBMISSION OF THE APPELLANT The appellant firm submit that, the partner Sri. A. Jayaramudu has agreed to disclose ₹ 2,00,00,000/- income for the Asst. Year 2013-2014 in the hands of the appellant firm under confusing state of mind. In fact, the appellant firm has sold 1 plot only for ₹ 1,96,000/- in the F. Y. 2012-2013. The appellant firm has earned a net profit of ₹ 9,307/- for the financial year 2012-2013 relevant to the asst. year 2013-2014. The assessing officer has not found any evidence and incriminating material and undisclosed income and suppression of sales and inflation of expenditure to the extent of ₹ 2,00,00,000/- in the F. Y. 2012-2013 relevant to the Asst. Year 2013-2014 and hence there was no any basis for making high value of ₹ 2,00,00,000/- to the return of income only on the basis of the statement given by the partner of appellant firm without supporting or substantiating any material or evidence for making sucba heavy addition of ₹ 2,00,00,000/-. Hence the assessing officer is not justified in making an addition of ₹ 2,00,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the appellant for the Asst. Year 2013-2014. The appellant firm, as per the books of accounts earned net profit of ₹ 9307/- for the F.Y. 2012-2013 relevant to the Asst. Year 2013-2014. These was no any reason for offering the income of ₹ 2,00,00,000/- in the hands of the appellant in the absence of any material or incriminating materials / records found in the survey operations. The offering of income of ₹ 2,00,00,000/- is not supported with any evidences. Hence the offering of income ₹ 2,00,00,000/- by the appellant firms partner was under pressure and under confusing state of mind during the course of recording of sworn statement. Hence the addition of ₹ 2,00,00,000/- is not justified and is against CBDT circulars issued by the department in reference to confessional statement given by the assessee at the time of survey operations. Hence the addition of income of ₹ 2,00,00,000/- is to be set aside. The appellant has further filed the following replies to the queries raised by the assessing officer in the Assessment Order. CONTENTION / ISSUES RAISED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER Query No.1- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her at the time of recording of the sworn statement [Sworn statement taken immediately on the following day of the survey operations i.e., 03.12.20131 or at the time of scrutiny proceedings in the A.Y. 2013-2014. The appellant firm did not get any opportunity to explain the noting in the said impounded material during the assessment proceedings in the A.Y. 2013-2014. Subsequently, the Asst. Commissioner of Income Tax, Circle-1, Kurnool has issued summons and asked for explanations and clarifications on each file / paper / material / documents etc impounded at the time of survey operations on 20.12.2016 during the scrutiny assessment proceedings for the assessment year 2014- 2015. The appellant's firm Managing Partner Sri. A. Jayaramudu has clearly explained of each paper / file / material / documents etc by item wise and filed a detailed explanation annexure on the impounded material. The Asst. Commissioner of Income Tax has recorded a sworn statement from the Managing Partner Sri. A. Jayaramudu and asked in Q.10 by showing sum impounded material and asked for the clarification. The Managing Partner of the firm has explained in detail on the impounded mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Asst. Year 2013-2014. There was no any basis 1 evidence for disclosure of heavy additional income of ₹ 2 Crores in the Asst. Year 2013-2014. Query No.6 The assessing officer has mentioned at Page No.5, Para No. 2.2 that As seen from the statement given by the A. Jayaramudu, Managing Partner of the firm U/s 131 of IT Act, he has declared to pay the taxes an additional income offered. But he has revised firms income. This clearly shows that he has retracted to his declaration given u/s 131 of the IT Act for additional income he has admitted. Hence the income of ₹ 2 Crores as admitted by the A. Jayaramudu his added back in the hands of the assessee firm. The appellant is referring the CBDT Circulars issued by the CBDT on the subject of survey proceedings and admission of income during survey proceedings. The appellant is referring several case laws in support of its submission that, the offering of income at the time of survey operations has no evidentiary value and the addition should be supported with sufficient evidences found in impounded material. The appellant submits that, it has filed the return of income on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g officer has not found the following during the F.Y. 2012-2013 relevant to the Asst. Year 2013-2014 in the impounded material - a. Any concealment of income; b. Any suppression of Sale / Receipts; c. Any undisclosed income; d. Any new Credits / loans found; e. No incriminating material found; f. No un explained expenditure found; g. No new investments made / found; h. Not specified / identified any reason for determination of income of ₹ 2 Crores; i. The Assessment order was passed against the CBDT Circular; j. The Assessment Order passed against the Supreme Court Judgment and other High Courts 5. The appellant has filed various case laws in support of its submissions. [The case laws are filed in paper book and placed on record]. I. CIT v. S. Khadar Khan Son (2013) 352 ITR 480 / [2012] 210 Taxman 248/ 79 DTR 184/254 CTR 228 (SC) By Asmeet Shah on 19.01.2015 II. Madras High Court The Commissioner Of Income Tax vs M/S.S.Khader Khan Son on 4 July, 2007 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 4.7.2007 THE HON'BLE MR.JUSTICE P.O.OINAKARAN AND THE HON ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Considering the facts, issues, circumstances of the instant case and keeping in view of the evidences submitted by the appellant and CBDT Circulars and Judicial pronouncement by the Hon'ble High Court of Telangana and Andhra Pradesh in the case of Gajjam Chinna Yellappa Vs. Income Tax Officer, IITA No. 268, 273 308 of 2003 and 287, 291 294 of 2006 Dt. 06 November 2014, the addition of ₹ 2,00,00,000/- is deleted on the following ground. (i) The Assessing Officer did not find any corroborative evidence or incriminating material in the survey operations / material impounded for making addition of income of ₹ 2,00,00,000/-. The mere fact that somebody made a statement, by itself cannot be treated as having resulted in an irrebuttable presumption against the assessee. The burden of showing that the assessee had disclosed income is on the revenue and that burden cannot be said have been discharged by merely referring to the statement. Therefore, such statement cannot be made the sole foundation for making the addition of income. We find support from the CBDT circular Dt. 10.03.2003 issued by the Central Board of Direct Taxes, which took exception to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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