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TMI Blog2024 (4) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... mpower any ITO to examine any person on oath; so statement recorded under section 133A has no evidentiary value and any admission made during such statement cannot be made basis of addition. We note that in assessee's case under consideration, the addition was made by the assessing officer based on the statement only, which is not permitted. Therefore, we note that during the survey proceedings no any incriminating material or tangible material was found by survey team in respect of addition made and it is settled position of law that statement on oath taken during Survey has no evidential value without any corroborative evidence. AO did not bring on record any corroborative evidence to make addition except statement of assessee. Moreover, the assessee, vide his letter during the assessment proceedings had requested the assessing officer to furnish him the incrimination material/corroborative evidences found during survey, by the survey team, in respect of addition which the assessing officer failed to provide to the assessee, and made the addition without corroborative evidences, which is not sustainable in the eye of law. We also note that during the assessment proceedings th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the above facts, we note that assessee could not plead his case successfully before the ld. CIT(A). We also note that Ld. CIT(A) has not passed the order as per the mandate of provisions of section 250(6) - CIT(A) did not pass order on merit based on the material available on record and based on assessee`s reply. Hence, we are of the view that one more opportunity should be given to the assessee to plead his case before the AO. We note that it is settled law that principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being heard to contest his case. Therefore, without delving much deeper into the merits of the case, in the interest of justice, we restore the matter back to the file of Assessing Officer for de novo adjudication and pass a speaking order after affording sufficient opportunity of being heard to the assessee, who in turn, is also directed to contest his stand forthwith. Assessee ground of appeal allowed for statistical purposes. - Shri Pawan Singh, JM And Dr. A. L. Saini, AM For the Appellant : Shri Mehul Shah, CA For the Respondent : Shri Ravi Kant Gupta, CIT(DR) And Vinod Kumar, Sr. DR ORDER PER A. L. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has not filed return of income under section 139(1) of the Act. The assessee also has not filed the return of income in response to notice under section 148 of the Act. On appeal, the ld. CIT(A) decided the appeal, ex-parte based on the material available on record. 4. Now, we shall take assessee s appeal in ITA No.809/SRT/2023, wherein the grounds of appeal raised by the assessee are as follows: 1. On the facts and in circumstances of the case as well as law on the subject, the learned CIT(A) has erred in passing ex-parte order without giving reasonable and sufficient opportunity of being heard. 2. On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(A) has erred confirming the action of assessing officer in making the addition of Rs. 6,47,417/- returned as business loss to the total income of the assessee. 3. On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(A) has erred in confirming the action of assessing officer in making the addition of Rs. 2,50,00,000/- as deemed income u/s. 68 of the I.T. Act, 1961. 4. It is therefore prayed that above addition made by the assessing officer and confirmed by CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is unaccounted income on account of on money received/receivable at answer to Question No. 11 of the statement recorded on 05.03.2014. The relevant portion of the statement is reproduced below: Q. 11: It is very common practice in your trade to pay and receive onmoney. What do you want to say in respect of all the three above stated projects? Ans.: Yes, you are right that in our trade the practice of receiving and giving on-money is very common and I am also part of the system. Therefore, I want to state that I have received/receivable around Rs 50 Lakh in the project named - Vimalnath Residency, around 60 Lakhs in the project named Vimalnath View and around Rs 1 Crore 40 Lakhs in the project named Vimal Hexagon. In short, the on-money received/receivable in all the above stated three project is around Rs 2 Crore 50 Lakhs which I want to declare the aforesaid amount of Rs 2.50 Crore as my undisclosed income from the aforesaid three projects. Further, I want to clarify that the aforesaid disclosed income of Rs 2.50 Crore is over and above my regular income from these projects. 8. The assessing officer noted that as per facts in the copies of Income Tax return (ITR) and financial sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded at the time of survey. The reliance is placed on the decision of the following cases: 1. Paul Mathews Sons v. CIT-263 ITR 101(Ker)(HC) 2. CIT v. S. Khader Khan Son - 300 ITR 157 (Mad)(HC) 4. The assessee vide letter dated 05.07.2018 had requested the AO to provide the copy of statement of the assessee recorded during the survey proceeding and other incrimination material on record on the basis of which addition of Rs. 2,50,00,000/- on account of undisclosed income is made. 12. However, the assessing officer rejected the contention of the assessee and held that the disclosure was made by the assessee on the basis of documents impounded during the course of survey proceedings, therefore AO made addition of Rs. 2,50,00,000/- u/s 68 of the Act. 13. In the second inning the assessing officer also made a fresh addition of Rs. 10,78,23,000/- on account of violation of provision of section 40(a)(ia) of the Act. 14. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A). Before, ld CIT(A), the assessee did not appear therefore, ld CIT(A) passed the ex parte order, on merit, based on the statements of facts submitted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while computing income chargeable under the Head profit and gain of business or profession in case of violation of applicable TDS provisions. It is apparent that the purchase of immovable property does not get covered in the above provisions of Section 40(a)(ia) of the Act. The default in deposit of TDS deducted u/s 194IA of the Act attracts other penal provisions provided in the Act. Therefore, it is apparent that the disallowance u/s 40(a)(ia) of the Act made by the AO in respect of failure to deposit TDS u/s 194IA of the Act is not accordance with the provisions of the Act. 6.4 In view of the above discussion, the addition of Rs. 10,78,23,000/- u/s 40(a)(ia) of the Act is not justified and the AO directed to delete the same. Ground No.1 is allowed. 15. However, the ld CIT(A) confirmed two additions, namely, Rs. 6,47,417/- in respect business loss and Rs. 2,50,00,000/- in respect of addition made on account of survey statement, observing as follows: 7. In Ground No.2, the appellant has challenged the addition of Rs. 6,47,417/- returned as business loss by the appellant. This addition was made in the original assessment order and the AO has considered the same amount while computi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in his ROI. It is apparent that the additional income was admitted during the course of Survey action conducted at the business premise of the appellant. There is nothing on record which suggests that the said admission was made under any coercion or force. This income was offered over and above the regular income from the real estate projects undertaken by the appellant, the appellant was duty bound to offer the same in his ROI after paying applicable taxes thereon. Considering overall facts of the case, I am of the opinion, that the AO was justified in making addition of Rs. 2,50,00,000/- as the appellant failed to disclose the admitted additional income in his ITR without any valid reason. In view of the above, the addition of Rs. 2,50,00,000/- made by the AO is upheld. Hence, Ground No.3 is dismissed. 9. In Ground No.4. the appellant has challenged the action of the AO enhancing addition by Rs. 10,78,23,000/-, although the Hon'ble ITAT had set aside the matter to the file of the AO on the issues relating to addition of Rs. 2,50,00,000/- and disallowance of loss of Rs. 6,47,417/-. The issue of addition of Rs. 10,78,23,000/- has already been dealt with in Ground No.1 above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no evidential value without any corroborative evidence of incrimination material, hence addition of Rs. 2,50,00,000/- may be deleted. 19. About returned loss of Rs. 6,47,417/-, the Ld. Counsel submitted that the assessee has shown as a returned business loss, however, the assessing officer made addition without any base. The assessing officer did not demonstrate, with cogent evidence, in the assessment order that how the business loss cannot be allowed to the assessee, was the assessee`s business illegal, etc. was not stated by the assessing officer. Hence, ld Counsel for the assessee submitted that assessee should be allowed carry forward of business loss in accordance with Income Tax Act. 20. On the other hand, learned Commissioner of Income Tax - Departmental Representative (ld. CIT-DR) and learned Senior Departmental Representative (ld. Sr. DR) for the Revenue submitted that the assessee s case was remanded back to the file of the Assessing Officer with the direction that the assessee will co-operate during the second inning, in assessment proceedings. However, again the assessee did not co-operate and did not file details before the Assessing Officer, therefore further innings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reliance is placed on the decision of the following cases: 1. Paul Mathews Sons v. CIT-263 ITR 101(Ker)(HC) 2. CIT v. S. Khader Khan Son - 300 ITR 157 (Mad)(HC) 4. The assessee vide letter dated 05.07.2018 had requested the AO to provide the copy of statement of the assessee recorded during the survey proceeding and other incrimination material on record on the basis of which addition of Rs. 2,50,00,000/- on account of undisclosed income is made. 24. From the above written submissions, the following important points emerged: (i) During the survey proceedings no any incriminating material or tangible material was found by survey team in respect of addition to the tune of Rs. 2,50,00,000/- under section 68 of the Act. (ii) The statement on oath taken during Survey has no evidential value without any corroborative evidence. (iii) The assessing officer while making the addition held that addition is made based on the material found during survey. However, the assessee, vide his letter dated 05.07.2018, during the assessment proceedings had requested the assessing officer to furnish him the incrimination material/corroborative evidences found during survey, by the survey team, in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1961 on oath on 05.03.2014, which is against the provisions of law. 26. Besides, the statement taken during Survey has no evidential value without any corroborative evidence and for this reliance is placed on the judgment of Hon`ble High Court of Madras, in the case of S. Khader Khan Son, 300 ITR 157 (Madras), wherein the Hon`ble Court held that section 133A does not empower any ITO to examine any person on oath; so statement recorded under section 133A has no evidentiary value and any admission made during such statement cannot be made basis of addition. The detailed findings of the Hon`ble Court are as follows: A power to examine a person on oath is specifically conferred on the authorities only under section 132(4) of the Act in the course of any search or seizure. Thus, the Income-tax Act whenever it thought fit and necessary to confer such power to examine a person on oath, has expressly provided for it, whereas section 133A does not empower any Income-tax Officer to examine any person on oath. Thus, in contradistinction 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntemplated 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) Similarly, when the issue, whether the expression such other materials or information as are available with the Assessing Officer in section 158BB of the Income-tax Act, 1961, would include the materials gathered during the survey operation under section 133A, came up for consideration before this court in CIT v. G. JCSenniappan [2006] 284 ITR 220, a Division Bench of this court, in which one of us was a party (P.P.S. Janarthana Raja J.), answered the question in the affirmative, against the Revenue and in favour of the assessee, holding that the materials collected during the survey under section 133A cannot be taken into consideration while determining the undisclosed income in respect of block assessment as per section 158BB, as the same has no evidentiary value. Again, when an identical question whether the material found in the course of survey in the premises of the builder could be used in the block assessment of the assessee, came up for consideration before this Division Bench in an unreported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1973] 91 ITR 18 ; (ii) In contradistinction 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 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, vide Paul Mathews and Sons v. CIT [2003] 263 ITR 101 (Ker.); (iii) The expression such other materials or Information as are available with the Assessing Officer contained in section 158BB of the Income-tax Act, 1961, would include the materials gathered during the survey operation under section 133A, vide CIT v. G. K. Senniappan [2006] 284 ITR 220 (Mad.) ; (iv) The material or information found in the course of survey proceeding could not be a basis for making any addition in the block assessment, vide decision of this court in T. C (A) No. 2620 of 2006 (between CIT v. S. Ajit Kumar [2008] 300 ITR 152 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of addition of Rs. 2,50,00,000/-, which the assessing officer failed to provide to the assessee, and made the addition without corroborative evidences, which is not sustainable in the eye of law.We also note that during the assessment proceedings the assessee stated in the written submission that By not offering Rs. 2,50,00,000/- in the Return of Income, the assessee has in a way retracted his statement , thus, we note that assessee has not accepted the statement recorded on oath during survey and rather it was retracted by him. Based on these facts and circumstances, we delete the addition of Rs. 2,50,00,000/-. 29. In the result, ground No.3 raised by the assessee in ITA No.809, is allowed. 30. About returned loss of Rs. 6,47,417/-, we find merit in the submission of Ld.CIT-DR to the effect that since the assessee has failed to furnish any explanation before the assessing officer, was well as before the ld CIT(A) therefore, we remit this issue back to the file of the assessing officer with the direction to the assessee to furnish explanation/justification of business loss before the assessing officer and then assessing officer should adjudicate the issue in accordance with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, it is possible for the penalty to be deleted or waived if sufficient cause is shown by the assessee. According to the assessee, there was a business loss hence assessee did have positive income, therefore assessee decided not to file the original return of income u/s 139 of the Act and this is the sufficient cause not to file the original return of income within the time prescribed under section 139(1), of the Income Tax Act. Therefore, assessee filed the belated return of income under section 139(4) of the Act. We note that the assessee has explained the sufficient cause or reason, not to leave the penalty under section 271F of the Act, therefore, we delete the penalty of Rs. 5000/- imposed by the assessing officer under section 271F of the Act. 37. In the result, appeal filed by the assessee in ITA No. 798/SRT/2023, is allowed. 38. In the following appeals of the assessee, there is non-compliance before the assessing officer as well as ld CIT(A). The brief facts of these appeals are given below: (i) ITA No.799/SRT/2023 for AY. 2015-16: In this case, assessment order was framed by the Assessing Officer under section 144 of the Act, as the assessee did not file the required det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see could not appear. Before ld CIT (A), the assessee could not appear because the notices for hearings were not delivered to the assessee. Considering the above facts, we note that assessee could not plead his case successfully before the ld. CIT(A). We also note that Ld. CIT(A) has not passed the order as per the mandate of provisions of section 250(6) of the Act. That is, ld. CIT(A) did not pass order on merit based on the material available on record and based on assessee`s reply. Hence, we are of the view that one more opportunity should be given to the assessee to plead his case before the Assessing Officer. We note that it is settled law that principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being heard to contest his case. Therefore, without delving much deeper into the merits of the case, in the interest of justice, we restore the matter back to the file of Assessing Officer for de novo adjudication and pass a speaking order after affording sufficient opportunity of being heard to the assessee, who in turn, is also directed to contest his stand forthwith. Therefore, we deem it fit and proper to set aside the or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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