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TMI Blog2023 (7) TMI 1480X X X X Extracts X X X X X X X X Extracts X X X X ..... that AO has made an observation on his own preconceived notion, without taking into the documents i.e. books of accounts etc. submitted by the assessee, which is against the principle of law laid down in the case of Vijay Kumar Kesar [ 2009 (8) TMI 675 - CHHATTISGARH HIGH COURT] as well as against the settled principle of law laid down in the case of S Kader Khan Son [ 2013 (6) TMI 305 - SC ORDER] wherein it was held that undue emphasis should not be given to confessional statement without material on the same. The settled position of law was further supported by the CBDT Circular No.F.No.286/2/2003-IT(Inv), dated 10th March, 2003 and Circular No.F.No.286/98/2013-IT (Inv.II), dated 18th December, 2014, thereby issuing guidelines to the revenue authorities to be observed/overseen and to be followed by collecting the evidence during the course of search/survey operations. First contention of the assessee that merely on the basis of confessional statement of the assessee which were recorded u/s.133A which could not be considered as sacrosanct or decisive having no supporting evidence to substantiate such confession, any addition made by the AO is subjected to be set aside. This conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks of account?" 4. "Whether on points of law and on facts & circumstances of the case, the Id. CIT(A) was justified in accepting fresh evidence produced by the assessee, if any without allowing the AO, proper opportunity to examine the same, thereby violating the provisions on law under Rule 46A of the I.T. Rules?" 5. "Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in giving a decision in favour of the assessee and against the revenue though there is no nexus between the conclusion of fact and primary fact upon which conclusion is based? 6. "Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs. 2,32,59,204/- by giving a finding which is contrary to the evidence on record, as the Ld. CIT(A) has accepted the profit result of the assessee after relying on the submission produced before him by the assessee without appreciating the content of the statement of Sh. Sanjay Singhal and other circumstantial evidences gathered during the survey proceedings which were also confronted in the statements, a finding which is factually incorrec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /-, reduced declared NP of Rs. 1,01,90,365/- and net NP of Rs.2,32,59,204/- added, based qu.no 14 page 8 of statement of Shri Sanjay Singhal (Para-6 page-3) Revenue effect 97,56,280/-( aprox.) It is assessee's appeal, hence, CBDT Circular no 17/2019 dated 08-08-2019 and does not fall under exceptional cases vide CBDT circular no 03/2018 dated 11-07-2018, is applicable in the case. AO is observation Based on survey finding and statement and various discrepancies, the AO was in view that books of accounts is not reliable. (Para03 Page-01) 1. AO show caused the assessee for rejection of books of account (para-4 page-2) 2. AO adjudicated assessee explanation on production of books of account para-4 page-2) 3. Based on reply of the partner, the AO rejected the explanation on production of books of account and rejection of books of accounts us 145(3) of the Act.(para4.1 page-28c3 ) 4. Books of accounts produced during the assessment proceedings is after thought and manipulated ( para-4.1 page-3) 5. The AO rejected books of accounts and estimated income at the 8% of Rs.3,34,49,568/ allowed disclosed NP and assessed addition at Rs.2,32,59,204/- Part-B-Appellate proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gorically, accepted that vouchers were not entered in regular books of account. (Reply 6 page 2) * The vouchers pertains to 13-02- 2016 and date of survey is 08-03-2016. The assessee failed to verify expenses vouchers in regular books of account. The books are with the assessee in computers and was not properly recorded and was complete. Hence, there is sufficient cause to doubt books result and rejection us 145(3). The accountant categorically re affirm that enters only those vouchers, which are given to him for accounting entry. He also admitted that there are some more vouchers which has been left for entry( reply 9 page-3) The facts above, reveals that the assessee is routine practicing pick and choose method to entered expenses in account and many more vouchers were left unentered in account. Preliminary Statement of Shri. Sanjay Singhal Reply -07, page 02,the assessee denies to maintained stock register and muster roll register and labor bill payment registers Three other firms also running in the same premise and sets of books of accounts of firms was kept in the same premise.(reply 7 page 3 &4) The assessee denied categorically that there is no subcontract for labor sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pression, a patient under treatment of depression and was under disturbed mental state(para-13),lost equilibrium of mind(para-14) loss of memory (para-16), under treatment of cervical problem in 04-06-2014.( para-10) Not reliable for the reasons as under *The assessee was a patient of cervical problem some where 2014 and two years was elapsed on the date of survey. The medical report furnished categorically denies that parenchyma, i.e. outer membrane made of cell, is found intact and no significant abnormally detected. The problem is connected only with bone problem in vertebra. The has self-made claim of loss of memory, depression and of affected brain not verifiable from medicine prescribed for treatment. *The medicine prescribed for treatment is restricted to dislocated vertebra and not for mental depression. 8. The flow of reply in the statement from nowhere reflects that assessee is in depressed mental statement. 9. The assessee is a partnership firm, and has good team and number of tax consultant employed in his organisation. He never requested survey team to be in depressed mental status and need the help of partners. The accountant was there to assist him in verifitiom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laced on decisions held as under ♦CIT Vs Durga Prasad More 82 ITR 540 [SC] ( Page -1 to 3) It was held that the apparent must be considered real until it is shown that there are reasons to believe that the apparent is not real and that the taxing authority are entitled to look into the surrounding circumstances and find out the reality and the matter has to be considered by applying the test of human probability. ♦Sumati Dayal Vs CIT [1995] 125 CTR 124 (SC) (Page 3 to 5) It was held that although apparent must be considered real but if there is reason to believe that apparent is not realas the case under consideration, then the apparent should be ignored to unearth harsh reality. * CIT Vs NR Portfolio ITA No. 1018/2011 HC of Delhi(Page 41 to 47)( emphasis) Para-14 When an assessee does not produce evidences or tries to avoid appearance before the assessing officer, it is necessarily creating difficulties and prevents ascertainment of true and correct facts as the assessing officer is denied advantage of the contention or factual assertion by the assessee before him. In case the assessee deliberately and intentionally fails to produce evidences before the assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fidavit has said that, he forgot completely that the return filed by the assessee-firm M/s PSA Construction for the assessment year 2013-2014 was subject to scrutiny under scrutiny assessment u/s.143(3) of the Act. During the course of assessment proceedings for AY 2013-14, the books of accounts along with bills and vouchers were duly produced and verified by the ld. AO and has made a retraction from the statements recorded u/s.133A of the Act on 09.03.2016. The partner of the assessee has submitted in the said affidavit that he must have agreed to offer income of 8% of the gross receipt subject to allowance on account of remuneration and interest to partners. The assessee has also taken the rescue of his disease as neck cervical commonly known as depression. All such medical reasons based on which the partner of the assessee has retracted are just to cover up the new story and after thoughts offered by the assessee during the assessment proceedings, therefore, the same could not considered and the findings of the AO which was purely based on the spontaneous and immediate statements of the partner of the assessee should be considered as final in the present case. Ld. Sr-DR further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed u/s 143(3) for A.Y. 2013-14 vide order dated 17.12.2015 The then Learned DCIT-2(1), Raipur had accepted book results of the assessee and the factum of having maintained the books of accounts and bills and vouchers was also affirmed by the then Learned DCIT-2(1), Raipur. Assessment got completed much before the date of Survey u/s 133A on 08.03.2016. 7. 08.03.20 16 to 09.03.20 16 Survey operation u/s 133 A conducted on business premises of the assessee. Statement of partner was recorded u/s 133A thrice, copies of statements are placed on Page No.86 to 106 ofPB. 8. 10.03.20 16 Books of accounts along with bills and vouchers for F.Y 2011- 12 to 2015-16 were produced vide letter dated 10.03.2016 in response to summon u/s 131 dated 09.03.2016. (Placed on Page No.70 of PB) Learned AO did not dispute this fact in the assessment order despite reproducing the contention of the assessee. 9. 08.04.20 16 Corrected statement by way of affidavit was filed by Shri Sanjay Singhal vide letter dated 08.04.2016. (Placed on Page No.107 to 114 of PB) The correction in the statement was duly made within a reasonable period of time. 10. 17.10.20 16 Notice u/s 142(1) was issued by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 33A has no evidentiary value: as has been held by the Hon'ble Supreme Court in the case of CIT vs. S Khader Khan Son (2012) 82 CCH357. 18. Non production of books of accounts at the time of survey cannot be a ground for rejecting books of account: Mere non production of books of accounts during the course of survey proceedings cannot be a sole reason for rejection of the books of accounts as has been held in the following judicial pronouncement: s. No. Title Citation Authority CLC reference 1. ITO vs. Vijay Kumar Kesar (2010) 327 ITR 497 High Court of Chhattisgarh Page 136 2. Mahesh Coal Traders vs. CIT 976, 977 of 2013 High Court of Allahabad Page 90 3. Evergreen Bar & Restaurant vs. Ad. CIT (2008) 27 CCH 170 Bombay Tribunal Page 240 19. Explanation furnished during the course of assessment proceedings cannot be ignored merely because explanation was not furnished during the course of survey: Where an explanation is not furnished to the survey team but later on the explanation is furnished during the course of assessment, then the same cannot be brushed aside if there is no material based on which books can be rejected. Reliance is placed on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nner of Assessment of Total Income in A.Y 2012-13, 2013-14 and 2015-16; The total income for the A.Y 2012-13, 2013-14 and 2015-16 was computed in the following manner: S. No. Particulars A.Y 12-13 A.Y 13-14 A.Y 15-16 1. Copy of Assessment Order is placed on following page No. of Paper book. Page 117 to 133 Page 134 to 149 Page 150 to 167 2. Contractual Receipts 19,15,01,238/- 29,48,13,181/- 68,41,91,293/- 3. Add: Interest on FDR 8,09,290/- 9,55,020/- 20,12,360/- 4. Gross Receipts 19,23,10,528/- 29,57,68,201/- 68,62,03,653/- 5. Net profit (a> 8% 1,53,84,842/- 2,36,61,456/- 5,48,96,292/- 6. Add: Interest on IT Refund 1,99,656/- - - 7. Less: Depreciation 1,10,27,495/- 1,78,16,666/- 3,16,24,345/- 8. Profit after Depreciation 45,57,003/- 58,44,790/- 2,32,71,927/- 9. Less: Partner's Remuneration & Interest 32,22,460/- 37,38,360/- 33,34,895/- 10. Computed Income as per the Direction u/s 144A (Learned AO had deducted Depreciation, Partner's Remuneration & Interest after considering N.P @ 8%) 13,34,543/- 21,06,430/- 1,99,37,032/- 11. Returned Income 1,49,39,900/- 1,34,82,630/- 1,06,83,770/- 12. Assessed Income 1,49,39,9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also submitted by the ld. AR that the partner of the assessee has informed to the survey team regarding the books of accounts maintained by the assessee firm. He drew our attention to the question No.7 of the statements recorded u/s.133A of the Act, dated 08.03.2016, wherein in answer to a query by the survey team, the partner of the assessee has submitted the books of accounts, like cash book, bank book, purchase book, sell book etc. and computer data are maintained in this office. Ld. AR further drew our attention to page 99 of the paper book wherein also at question No.5 the partner of the assessee Mr. Sanjay Singhal has answered that in their Shankar Nagar office, cash book, cash register, sale register, ledger, journal etc. are kept in computer, stock register are not maintained, attendance register/salary register, check register, bank guarantee file, income tax file, LIC file etc. Ld. AR further submitted that the survey team has duly acknowledged that the books of accounts along with bills and vouchers have been maintained to support this contention. Ld. AR drew our attention to question No.11 of the statement dated 09.03.2016, wherein in question No.11, survey team itse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied on the following judgments :- i) ITO Vs. Vijay Kumar Kesar, [2010] 327 ITR 497, wherein the jurisdictional High Court has held as under :- Section 69 of the Income-tax Act, 1961 - Unexplained investments - Assessment year 2000-01 - Where addition was based solely on assessee's confession during survey which was later retracted and Commissioner (Appeals), after considering material produced by assessee during assessment proceedings and on due appreciation thereof, had accepted explanation of assessee for retraction of his admission as bona fide and further accepted books of account prepared by assessee on basis of duly verified primary evidence and Tribunal had confirmed order of Commissioner (Appeals), in view of retraction of admission by assessee, deletion of addition was justified [In favour of assessee] ii) Mahesh Coal Traders Vs. CIT, ITA No.976&977 of 2013, order dated 13.045.2020 (Allahabad High Court), wherein the Hon'ble High Court has held as under :- 14. In the instant case, it seems that the books of accounts were tallied and there is no mention of any deficiency in the books of accounts, but they have been rejected solely on the ground that the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... secutive years, that too without any incriminating evidence was not justified in his action and additions made on that basis could not be sutained. 11. Ld. AR also contended that explanation furnished during the course of assessment proceedings cannot be ignored because the explanation was not furnished during the course of survey. On this aspect, ld. AR relied on the following judgments. i) Yadurish Rai Jhunjhunwala (1987) 67 STC 381 (Allahabad High Court) ii) Ramdas Jugani (2006) 282 ITR 356 (Madhya Pradesh High Court 12. The next contention of the assessee with regard to issue in hand that no specific defect or discrepancy or infirmity pointed out in the books of accounts submitted by the assessee during the course of assessment proceedings. In support of his contention, ld. AR relied on the following case laws :- i) Padamchand Ramgopal, (1970) 76 ITR 7196 (SC) ii) M/s Sanjay Agrawal, ITA Nos.82/RPR/2018(ITAT Raipur Bench) iii) M/s Radheshyam Agrawal, (2009) 315n ITR 185; (Punjab & Haryana High Court) iv) Dr. Prabhudayal, (2018) 162 DTR 0012 (Allahabad High Court) 13. It was the submission of the ld.AR that allegation of the ld. AO that books of accounts ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e direction of ld. JCIT u/s.144A of the Act then the returned income will be considered as assessed income. Therefore, it was the submission of the ld. AR that the same proposition should be applied for assessing the income for the assessment year 2014-2015 i.e. the year under consideration in the present appeal. Ld. AR further submitted that under the rule of consistency when the department has taken a stand in one year, the same modus operandi in calculating the taxable income of the assessee should be applied in the other years also. In support of such contention ld. AR has relied upon the following case laws :- i) Radhasaomisatsang Vs. CIT, (1992) 193 ITR 321 (SC) ii) CIT Vs. Godavari Corporation Ltd, (1985) 156 ITR 835 (Madhya Pradesh High Court) iii) ITO Vs. TEjmalbhai & Co., (2006) 99 ITD 399 (ITAT Rajkot Tribunal) iv) Indian Herbs Research & supply vs. ACIT, (2006) 25 CCH 0091. 15. We have considered the rival submissions, perused the material available on record and the case laws placed before us to support the contentions by the parties. On perusal of the order of the ld. AO, it is discernible that the assessee has produced the books of accounts, bills and vo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks of accounts maintained on computer, however, supporting documents and vouchers were not produced before the survey team during the survey proceedings u/s.133A of the Act but all the books of accounts, bills and vouchers with supporting evidences were submitted by the assessee before the AO during the assessment proceedings but the same were summarily rejected by the ld. AO stating that it seems that assessee has manipulated the books of accounts and other documents, hence, the same cannot be relied upon. Such an observation of the ld.AO shows that ld. AO has made an observation on his own preconceived notion, without taking into the documents i.e. books of accounts etc. submitted by the assessee, which is against the principle of law laid down by the Hon'ble Jurisdictional High Court in the case of Vijay Kumar Kesar (supra) as well as against the settled principle of law laid down by the Hon'ble Supreme Court in the case of S Kader Khan Son (supra), wherein it was held that undue emphasis should not be given to confessional statement without material on the same. The settled position of law was further supported by the CBDT Circular No.F.No.286/2/2003-IT(Inv), dated 10th March ..... X X X X Extracts X X X X X X X X Extracts X X X X
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