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TMI Blog2022 (2) TMI 518X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned land rather it is a part of capital contribution by partner. If there was any remote chance of unexplained investment in the land, it might have been made by partner who had purchased the land in his individual capacity in FY 2007-08. No such investigation is carried out either by the AO or by ld CIT(A). No addition is made in the hand of purchaser of land, though; it was informed to the AO at the initial stage that the said land was purchased by individual partner. It is settled law that statement recorded during the survey action has no evidentiary value unless it is corroborated with material evidence, when the statement made during the survey stand retracted. We find that in Pawan Kumar Goel [ 2019 (6) TMI 52 - PUNJAB AND HARYANA HIGH COURT] held that provision of section 133A(4) prohibits the income tax authority to remove cash, stock or other valuable article and it is only upon non-cooperation or refusal by the person under search that power under section 131(1) can be resorted. Recording of the statement by survey team under section 131(1) is not valid. Thus, no cognizance of such statement could be taken. Hence, the addition which is solely based on the sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... project in the name and style of Water World Project in outskirts of Surat City. During the survey statement of Gobarbhai Gondalia partner of assessee firm was recorded. In the statement,the partner of assessee stated that he has sold land admeasuring 76,788 square yard and received a consideration of ₹ 4.22 crore. Further, in question no. 15 16 he disclosed that the land was purchased in the year 2007 for ₹ 6,30,000/- from two different parties. He disclosed unaccounted investment in the hand of firm in the year 2007. 3. On the basis of such statement, the AO issued show cause notice as to why ₹ 4.22 crore should not be taken as unaccounted investment for the A.Y. 2008-09. In response to the show cause notice, the assessee filed its reply. The reply of assessee is recorded in para 7 of the assessment order. In the reply, the assessee in sum and substances stated that there is a factual error in recording reasons of reopening that statement of Gobarbhai Gondalia was recorded twice and that he confirmed the sale of land for a consideration of ₹ 4.22 crore. Gobarbhai Gondalia belongs to traditional agricultural family. He hardly studied up to 6th stand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration was completed in 2007 itself. 4. The reply of the assessee was not accepted by the AO. The AO held that during the survey, the statement of partner was recorded under section 131 of the Act. In the statement, the partner stated that he sold the land admeasuring 76,788 square yard in the year 2007 @ ₹ 550 per square yard to the firm and received consideration of ₹ 4.22 crore. Further, in reply to question no.16 17 he disclosed that land was purchased for a net consideration of ₹ 4.16 crore which was disclosed as his unaccounted receipt. The AO further recorded that the payment by the assessee firm was not accounted in the regular books of accounts, therefore, the same was treated as unaccounted investment in the hand of firm. On the retraction statement, the AO concluded that retraction was made after 40 days of survey proceedings and no clenching evidence was furnished by Gobarbhai Gondalia. After referring certain case laws, the AO made addition in the hand of assessee firm of ₹ 4.22 crore on account unexplained investment. 5. On appeal before the ld.CIT(A), the assessee challenged the validity of reopening under section 147 as well a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the copy of purchase deeds dated 26.04.2007 and 04.05.2007 and submitted that the sale consideration as per sale deeds are ₹ 630,000/-. No additional stamp duty was required on such sale deeds by the Stamp valuation authorities as the land were purchased as per Jantri rates. 6. In alternative submissions the assessee stated that no addition is made in case of Partner Gobarbhai Gondalia on the ground that he made unexplained investment in the lands, which indicate that the lands were purchased at considerations shown in the sale deeds. The same AO has jurisdiction over the partner of the assessee firm. The impugned land were acquired in FY 2007-08 and as per the allegation of AO the said land was transferred to assessee-firm in the same financial year. The same AO having jurisdiction over partner namely Gobarbhai Gondalia, has not made any addition on account of unaccounted investment in purchase of land. 7. The ld. CIT(A), after considering the submission of the assessee held that the assessee is claiming that land was purchased for less than ₹ 10/- Per square yard and was sold at a price of ₹ 400 square yard. The actual sale price was around ₹ 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tement of Shri Gobarbhai Gondalia, the entire gamut of facts and circumstances of the case, the assessment order and the submissions of the appellant. It is a peculiar case where the statements and submissions are inconsistent and therefore facts in the entirety rather than any assertion/statement in isolation would have to be considered. The following pertinent observations/facts are culled out of the above: 1) The appellant is claiming that the land was purchased for less than ₹ 10 per sq. yard. By its own books after little development it has itself shown the sale price at over ₹ 400/- per sq. yard. The actual sale price was around ₹ 1,500/- per sq. yard as discussed and decided hereafter and in para X of this order. Such a drastic multiplication of sale consideration (around 40 times by appellant's books, much more if unaccounted disclosed income of ₹ 1.5 crore is considered and over 150 times as per my decision) is not possible within a year or two of purchase. 2) The appellant had itself accepted net undisclosed income of ₹ 1.5 crore from the project till the date of survey i.e. as on 06.01.2010 and has shown it in the return fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to believe that the plot could not have been purchased for as low as the sum shown of below ₹ 7 lac; and the partner who is severally and jointly responsible had given the actual value in the statement. Therefore, the value of land is held to be ₹ 4,22,33,400/-. However, the purchase price of the impugned land as shown in the books of account of the firm would have to be reduced, and the AO is directed to do so while giving the effect to this order for working out the addition for undisclosed investment. The ground of appeal is decided accordingly. 8. Further aggrieved, the assessee has filed present appeal before this Tribunal by raising the grounds of appeal, which we have recorded in para-1 (supra). 9. We have heard the submission of ld.Authorised Representative(ld.AR) of the assessee and ld.Commissioner of Income Tax Departmental Representative(ld.CIT-DR) for the Revenue and perused the orders of Lower Authorities carefully.Ground No.1 relates to additions of ₹ 4.22 crore on account of unexplained investment in purchase of land from Gobarbhai Gondalia (partner). The ld.AR of the assessee submits that the assessee-firm right from the beginning cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed sale consideration. In case of recipient of such alleged unaccounted sale i.e. partner/ Gobarbhai Gondalia, no addition is made by Revenue on the relevant ground. The addition is made solely on the basis of statement of Gobarbhai Gondalia recorded during the survey on 07.01.2010. The statement was recorded at 3.30 AM during night hours. 10. The ld AR for the assessee submits that Hon ble Gujarat High Court in case of Kailashben Manharlal Chokshi Vs CIT 328 ITR 411 (Guj) held that no reliance can be placed and no credence can be adopted to the statement recorded during such odd night hours. On the finding of ld. CIT(A) that no proof of statement at midnight, the ld.AR for the assessee submits that Hon ble Supreme Court have consistently held that statement recorded during survey has no evidentiary value when same is retracted by deponent of the statement. To support his submission, the ld.AR for the assessee relied upon the following decisions: (i) CIT V/s S. Khader Khan Son (2012) 254 CTR 228 (SC). (ii) CIT-III V/s Golden Finance (2013) 40 Taxmann.com 329 (Guj). (iii) M/s. Shashi Wines V/s ITO Vapi, Ward-4, Daman ITA No. 882/Ahd/2017. (iv) CIT V/sDigamba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y proceedings. There is no such claim or observation of non-cooperation of Mr. Gobarbhai Gondalia recorded by Survey Officer, therefore, recourse of section 131(1) of the Act for recording the impugned statement on oath by Survey Officer is illegal and invalid. To support his submission, the ld.AR for the assessee relied upon the following decisions: (i) Pawan Kumar Goel v. Union of India (2019) 107 taxmann.com 21 (P H). (ii) CIT v. Mool Chand Salecha (2002) 124 Taxman 898 (Raj.). (iii) Shri Venkateshwara Tourist Home P. Ltd. v. ADIT (1998) 101 Taxman 710 (Kar.). (iv) Maruti Mills Private Limited V/s Union of India and Others (2000) 159 CTR (Raj) 142. (v) Dr. Vijay Pahwa V/s Samir Mukhopadhyay (1995) 129 CTR (Cal) 64. (vi) Gheru Lai Bal Chand V/s ITO (1982) 137 ITR 190 (P H). (vii) Ram Saroop Pawan Kumar V/s ITO (1980) 18 CTR 101 (P H). 13. The ld.AR for the assessee finally submits that as per CBDT Circular dated 10.03.2003, the copy of which is already placed, the CBDT directed its officer to focus on collection of incriminating evidence during the search/survey proceedings rather than obtaining admission of huge unaccounted income by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e partner namely Gobarbhai Gondalia disclosed that a land admeasuring 76,788 Sq yard was sold by him in the year 2007 @ 550 per Sq yard to the firm and he had received ₹ 4.22 Crore. In response to the question he specifically answered that the said land was purchased by him on a consideration of ₹ 4.16 Crore. The payments made by the firm was not accounted in the books of the firm. The statement of the partner was a valid statement. The retraction made by the partner on the ground that there was duress or any pressure is not supported by any evidence. The retraction was made after more than one month time. The ld Dr for the revenue fully supported the order of the lower authorities. 16. We have considered the rival submissions of the parties and have gone through the orders of the lower authorities. We have also deliberated on the various case laws relied by the ld. AR for the assessee. The AO made additions on account of unexplained investment of ₹ 4.22 Crore by taking view that a survey action was carried out at the premises of the assesseefirm, during the survey, the statement of partner was recorded under section 131 of the Act. The partner in his stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt by firm in the land from Mr. Gobarbhai Gondalia. In fact, the impugned land was purchased by Gobarbhai Gondalia in his individual capacity and after purchase of said land Gobarbhai Gondalia; partner of the assessee introduced the said two piece of land into assessee-firm as his capital contribution. During his submissions the ld AR for the assessee also invited our attention on the contents of deed of partnership deed dated 07.10.2008, copy of which is placed in paper book. We find merit in the submissions of the ld AR for the assessee the impugned land was originally purchased by Mr. Gobarbhai Gondalia as per sale deed dated 09.03.2007 and 26.04.2007, copy of which are available at page No.133 to 171 of paper book (PB). On further perusal of the various clauses of partnership deed 07.10.2008, we find that those pieces of land were introduced as a capital contribution by Gobarbhai Gondalia, which is clearly discernable from the contract of the partnership. The partnership is registered in office of Sub-Registrar Navsari vide document No. 8013 dated 08.10.2008. The registration of the partnership is much prior to survey action on 06.01.2010 and recording the statements of partner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were of loans and advances and, moreover, statement recorded during survey could not be relied upon, impugned addition was to be set aside. Thus, considering the above factual discussions and legal view taken by Jurisdictional High Court, we are of the view that there is no justification of making addition in absence of any evidence of unaccounted investment. Hence, we direct the AO to delete the addition. 21. The ld AR for the assessee also vehemently submitted that recording of statement under section 131(1) during the course of survey is illegal and invalid unless there is satisfaction of survey party that the person refuses to make his statement or does not co-operate in recording statement during survey. We have seen that contents of the statement of partners of the assessee recorded under section 131(1), however, there is no endorsement of the survey party that the partners of the assessee-firm refused to have their statement or not co-operated during survey. 22. We find that Hon ble Gujarat high Court in Pawan Kumar Goel Vs Union of India (supra) held that provision of section 133A(4) prohibits the income tax authority to remove cash, stock or other valuable articl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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