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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 ..... 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 contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 incorrect thereby rendering the decision, which is perverse? 7. The order of Ld. CIT(A) is erroneous both in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue 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 Ground of appeal before CIT appeal GR-l-books of account rejected under section 145(3) is bad in law. GR-2- AO errored in applying 8% under section 44AD on gross receipt fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar 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 supply.f reply-10 page 5) No fix agreement for payments to labours the rate fluctuate and no records maintained. Reply 12 page-08-03. Based on the above statement of accountant and the assessee, the authorised officer rightly doubted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of books of account, but he also admitted that the expenses voucher are not recorded properly. 10. it is unimaginable the person under mental depression perusing hard to obtain copies of survey material by three consecutive letter dated 08-04- 2016,21- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itled 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 officer with the desire to prevent enquiry or investigation, an adverse view should be taken. Para -31 What is unmistakably visible and apparent, cannot be spurred by formal but unreliable pale evidences ignoring the patent and what is plain and writ large on current finding of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts 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 drew our attention to the operating para of the order of the ld. CIT(A) and submitted that the ld. CIT(A) has gross erred in deciding the issue stating that the rejection of books of accounts and estimation of profit is based on merely the statement of assessee s director u/s.133A of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the Learned AO. 11. 07.11.2016 Assessee had duly submitted the reply in response to Notice u/s 142(1). 12. Ledger of expenses duly filed. 13. Name, address and PAN of Sub Contactors were filed alongwith amount and TDS deducted. 14. TDS Returns along with challans were duly submitted. 15. Details of Vehicle, Plant running maintenance expenses were dul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld 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 the following judicial pronouncement: S. No. Title Citation Authority CLC Reference 1. Yadurish Rai Jhunjhunwla vs. CST (1987) 67 STC381 High Court of Allahabad Page 120 2. Ramdas Jugani vs. CIT (2006) 282 ITR 356 High Court of Madhya Pradesh Page 121 5.1 No specific defect or discrepancy or infirmity pointed out in the books of accounts ; Reliance is placed on following judicial pronouncements in support of contention that rejection of books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 1,49,39,900/- 1,34,82,630/- 1,99,37,032/- The Teamed JCIT, Range-2, Raipur had issued direction u/s 144A dated 20.12.2017 for the A.Y 2012-13, 2013-14 and 2015-16 and had directed the Learned AO to allow depreciation, partner s remuneration and interest separately after estimating the Net Profit @ 8% of the Gross Receipts with a condition that assessed income should not be less than returned income. Computation of Net profit as per the Modus Operand! applied by the Learned AO in the assessment of A.Y 2012-13, 2013-14 and 2015-16 following the directions issued u/s 144A: S. No. Particulars Amount % 1. Contractual Receipts 41,81,19,598/- 2. Add: Interest on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 itself has framed the question that during the survey proceedings, books of accounts, cash book ledger, which was found in computer regarding expenditure, bills and vouchers were demanded and the assessee was questioned to answer regarding certain bills and vouchers that on verification of such vouchers it was found that payments were made in cash. Ld. AR submitted that such question was put up by the survey team, this shows that bills and vouchers were available before them. Ld.AR further drew our attention to question No.13 of the statement, wherein it was the question of survey team that the books of accounts were found on computer but the bills and vouchers were not found at the premises of the assessee, therefore, it was proposed by the survey team th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee, 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 were not found in the premises during the survey. The tribunal has also not considered any other reason for accepting the rejection of books of accounts which, in my opinion, is based on apprehension, rather than due consideration of the facts of the present case. It is also borne from the record that for the financial year 2008-09 tax invoice No. 467 dated 05.02.2009 relating to 63.225 metric tons of Coal was found where the coal was sold at the rate of Rs.3750/- per MT. It has also been observed that during the same period other traders have sold coal at the rate of Rs.6200/-per MT while the brick kiln is at the Ghaziabad and appellants have purchased coal for Rs.5800/- to Rs.6400/-. It is interesting to note that no details of any trader has been specifically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, 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 have been prepared as an afterthought is baseless, the statement of assessee for surrender cannot be considered as sacrosanct or decisive. In support of this, ld. AR relied on the following case laws :- i) Pullangode Rubber Produce Col Ltd. (1973) 91 ITR 18 ii) ITO Vs. Vijay Kumar Kesar (2010) 327 ITR 497 (High Court of Chhatisgarh) 14. It was also the contention of the ld.AR that the statements of the assessee were not voluntarily to substantiate its contentions, following the case laws relied upon. Ld.AR further submitted before us the copy of the CBDT Circular dated 10.03.2003 18.12.2014 available at page Nos.711 to 714 of the paper book, wherein the Circular No.F.No.286/2/2003- IT(Inv), dated 10th March, 2003, it is directed that in respect of pending assessment proceedings also, the assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jkot 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 vouchers during the assessment proceedings, however, since the same could not be provided to the survey team during the survey proceedings, the AO has not accepted the same with the observations that such books and documents prepared were an afterthought and are manipulated. Assessee s claim that the survey team has not provided them with sufficient time to produce the documents, was not found convincing by the ld. AO. When the issue was assailed before the ld.CIT(A) after going through the facts of the case and the relevant case laws, ld. CIT(A) has decided the matter in favour of the assessee deleting the addition made by the AO with the observations that rejection of books and estimation of profit is based on merely the statement of assessee s partner u/s.133A of the Act, there are several facts which were discussed in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upra) 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, 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. 17. In view of the aforesaid observations on the first contention of the assessee that merely on the basis of confessional statement of the assessee which were recorded u/s.133A of the Act 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 contention of the assessee is worth acceptance in terms of judicial pronouncements by the Hon ble Apex Court and Hon ble Jurisdictional High Court as referred to supra. Ld. CIT(A) has accepted the said contention ..... X X X X Extracts X X X X X X X X Extracts X X X X
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