SANJAY SULTANIA,SUNDARGARH vs. ITO,WARD-3, SUNDARGARH

The assessee has raised the following grounds: The assessee has raised the following grounds:

For that the order passed by the Id. below forum suffers vice of passed by the Id. below forum suffers vice of illegality and arbitrariness; illegality and arbitrariness; 2. For that under the facts and circumstances of the case the Id.

2. For that under the facts and circumstances of the case the Id. 2. For that under the facts and circumstances of the case the Id. below forum has grossly erred in making additions of Rs. 19,41,740/- below forum has grossly erred in making additions of Rs. 19,41,740/ below forum has grossly erred in making additions of Rs. 19,41,740/ on the basis of writing on loose sheets on the basis of writing on loose sheets and admission extracted and admission extracted under coercion and under influence during the course of survey under coercion and under influence during the course of survey under coercion and under influence during the course of survey proceedings; proceedings; 3. For that the additions are not backed by any cohesive primary 3. For that the additions are not backed by any cohesive primary 3. For that the additions are not backed by any cohesive primary and circumstantial evidence as to its nature and its source. The and circumstantial evidence as to its nature and its source. The and circumstantial evidence as to its nature and its source. The persons from whom persons from whom receipts have been purported to be made are have been purported to be made are P a g e 1 | 8 unidentifiable, not-existent and are thus a sham and imaginary transaction; 4. For that the Id. below forum has not applied his mind judicial conclude to the case; 5. For that the survey proceedings u/s,133A of the IT Act, 1961 itself have been conducted in a manner defying instruction and circulars of CBDT which is binding upon all its subordinates; 6. For that the survey proceedings and assessment proceedings have been headed by same official. The assessment thus made is biased and unjustified and therefore bad in the eyes of law; 7. For that under the facts and circumstances of the case the Id. below forum has erred in considering the interest of Rs.42,771/- on the basis of form 26AS without verification from bank.”

Ground Nos.1 and 3 to 6 are general in nature.

In Ground No.2, the assessee has challenged the addition of Rs.19,41,740/- on the basis of material found during the course of survey.

Facts of the case are that a survey action u/s.133A of the I.T.Act, 1961 was conducted on 18.1.2012 at the business premises of the assessee. During the course of survey, certain documents were found that the assessee has received Rs.7,23,452/-, from Maa Ambe Enterprises, Jharsuguda, Rs.5,76,291/- from Unicon Tech Co. Jharkhand and Rs.6,41,997/- from Sundaram Technical Services, Barpali totaling to Rs.19,41,740/- in the name of Shreshta Nirman, prop. Concern of the assessee. During the course of survey, statement of assessee was recorded wherein, he has admitted to be the same as undisclosed income and advance tax of Rs.6,00,000/- was paid. Later on during the course of P a g e 2 | 8 assessment proceedings, the assessee has stated that undisclosed income was made under duress and coercion and claimed refund of the same while filing the return of income. The Assessing Officer did not accept the contention of the assessee and observed that the statement during the assessment proceedings that the confession of undisclosed income is under duress is an afterthought. He, therefore, treated Rs.19,61,740/- as undisclosed income and added the same to the total income of the assessee.

In first appeal, the action of the AO was confirmed.

Ld A.R. of the assessee submitted that during the course of assessment proceedings, books of account alongwith bills and vouchers were produced and same were test checked. He submitted that the assessee has not made any transaction with the three parties as claimed by the department. He submitted that during survey proceedings, income tax officers all of a sudden entered the business premises and made enquiries and compelled the assessee make statement that Rs.19,61,740/- as his undisclosed income and statement was given under duress. Ld A.R. referred to the circular issued by the Central Board of Direct Taxes dated 10.03.2003 which reads as follows :-

Ld A.R. further submitted that the assessee is a contractor and even it assumes that Rs.19,41,740/- is treated as undisclosed receipts, any business receipts would be treated as contract receipt. Therefore, the entire receipt cannot be added to the total income of the assessee and income embedded therefrom can be added only. Ld A.R. also submitted that the expenditure on the receipts was not considered.

Replying to above, ld DR submits that a survey was conducted at the business premises of the assessee. During the survey action statement of the assessee was recorded on oath. The assessee admitted to have received Rs.19,41,740/- from three entities in the name of Shreshta Nirman, prop. Concern of the assessee. The statement was given voluntarily

I have considered the rival submissions and perused the materials placed on the record of the Tribunal. It is not in dispute that during the course of survey in the case of the assessee, certain documents were found that the assessee has received Rs.7,23,452/-, from Maa Ambe Enterprises, Jharsuguda, Rs.5,76,291/- from Unicon Tech Co. Jharkhand and Rs.6,41,997/- from Sundaram Technical Services, Barpali totaling to Rs.19,41,740/- in the name of Shreshta Nirman, prop. Concern of the assessee. From the assessment order, I observe that on this issue, the assessee explained that if receipts are capital in nature then it is not taxable and if receipts are revenue in nature then it must be out of sales or services rendered. It was further explained by the assessee that if these are contract receipts then the assessee must have incurred some expenditure to P a g e 5 | 8 earn these receipts, therefore, provisions of section 44AD of the Act should be applied and enhancement be only restricted to 8% of impugned amount of Rs.19,41,740/-. The Assessing Officer dismissed this explanation by observing that during the recording of statement u/s.1334A of the Act, the assessee had admitted/deposited the advance tax of Rs.6 lakhs on the undisclosed impugned receipts, since he could not explain the source of above receipts, hence, the plea taken by the assessee is afterthought and not acceptable. With these observations, the AO treated the impugned amount as undisclosed income of the assessee and added the same to the return income of the assessee.

From the relevant para of the impugned order of the ld CIT(A), I observe that the assessee submitted that all of a sudden, nearly 13 officers of the Income tax Department entered into the premises and made enquiries and undisclosed income was made under duress. Ld CIT(A) relying on the statement made by the assessee during the survey proceedings made and dismissing the explanation of the assessee confirmed the addition by observing that on perusal of both the statements, it clearly suggests that there was neither duress nor coercion on the appellant at the time of giving statement. He also observed that survey was conducted on 18.1.2012 and there was no retraction till January, 2015, when the appellant replied to the show cause notice of the AO and thus a period nearly three years passed without any communication from the assessee

In the present case, I am satisfied that there was substantial evidence in the hands of survey team in the form of receipts (Assessee’s PB 17,18 & 19). Therefore, statements recorded by the survey team on the basis of such receipts cannot be alleged as not based upon credible evidence. I may point out that in the present case, no retraction was filed by the assessee before the authorities below nor during the course of survey proceedings and also during the course of assessment proceedings by way of any plausible evidence or by any other mode. Therefore, the statements recorded by the survey team based on credible evidence without