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Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM & SHRI LALIET KUMAR, JM
आदेश / ORDER PER LALIET KUMAR, JM :
This appeal preferred by the Revenue emanates from the order of the Ld. CIT(Appeals)-3, Pune dated 09.03.2017 for the assessment year 2010-11 as per the following grounds of appeal on record:
“1. On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made by the Assessing Officer to the tune of Rs.4,62,17,350/- (being difference of income of Rs.9.55 Crores and returned income of Rs.4,87,82,650/- to the returned income without considering the contents of the Profit and Loss account maintained by the assessee in the computer system in his premises found during survey on 19.01.2010 and also admitted as his income in the statement given by the assessee on oath.
2. On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made by the Assessing Officer without considering that the assessee had not retracted his statement nor had he given any explanation as to how the profit of Rs.8.63 Crores as on 19.01.2010 had come down to Rs.4.87 Crores as on 31.03.2010.
3. On the facts and circumstances of the case, the Ld. CIT(A) has erred in not appreciating that the assessee in his answer to Question No.25 of his statement recorded on oath had stated that apart from the estimated profit of Rs.9.55 crores for A.Y. 2010-11, he further proposes to revise his return of income for A.Y. 2008-09 & 2009-10 to incorporate „additional income‟ of Rs.2.60 crores and Rs.2.20 Crores respectively.
4. The appellant prays to be allowed to add, amend, modify, rectify, delete or raise any grounds of appeal during the course of appellate proceedings.”
The Ld. DR for the Revenue has drawn our attention to Para 5.1 to 5.3 of the order of Assessing Officer where the Assessing Officer noticed that the survey action u/s.133A of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟) was conducted in the premises of the assessee and the assessee at that time has given statement under oath based on Profit & Loss account maintained by the assessee in the computer system, which was extracted at the time of survey on 19.01.2010. Upto the date of survey, the assessee has earned the profit of Rs.8.63 Crores. During the course of assessment proceedings, the Assessing Officer has also reproduced the statement of the assessee where the assessee agreed to estimate the total profit of the year at Rs.9.5 Crores (Answer to Question 25) as in the return of income, the assessee has only declared the income amounting to Rs.4,87,82,650/- and Rs.4,62,17,350/- was added back to the total income of the assessee by the Assessing Officer on account of actual profit of the business, based on the extracted profit and loss account and also on account of statement given by the assessee. We are reproducing herein below the Para 5.1 and 5.2 of the order passed by the Assessing Officer which was to the following effect:
“5.1 It is found that the action under section 133A was conducted in the business premise of the assessee on 19.01.2010. The assessee has given a statement under oath during the survey action. The relevant questions and their answers are reproduced as below: Q.
A copy of the profit and loss account as on date has been extracted from your computer in respect of your propriety concern which reflects a profit of Rs.8.63 Crores. What is the tax paid by you for the current financial year i.e. 2009-10? Ans. TDS is deducted from my contract receipts besides I have also paid Rs.6 Lakhs by way of advance tax. I propose to pay the balance tax by way of third installment before 15th March, 2010. Q. 24 As per the profit and loss accounts extracted as on 19.01.2010 is present account reflects G.P. of 24.16% whereas the GP as per your last return of income for Ay 2009-10 is 13.78%. Kindly explain the variation in GP? Ans. The contract receipts for the year includes earth work to the extent of Rs.36.07 crores thus far. There is a higher margin in the sale type of contract work which was resulted in a better G.P. Q.
Do you have to state anything more than what is stated above? Ans. I have to state that the income estimated for the year ending 31st march, 2010 shall be in the vicinity of 955 crores and I undertake to pay the taxes before 31st March 2010. I further propose to revise my return for A.Y. 2008-09 and AY 2009-10 to incorporate additional income of Rs.2.60 Crores and Rs.2.20 Crores respectively and pay the taxes due thereon with the understanding that I shall not be visited with any penalty on this account by filing revised returns. I have nothing further to state than except that the statement is given voluntarily and without any coercion or fear or any promise.
5.2 It is found that the assessee has net profit of Rs.4,87,82,650/- during the year under consideration. As per the statement given by the assessee under oath in front of the then ACIT, Circle-4, Pune, he stated that during the year under consideration there is better gross profit than in the earlier years. Further, the assessee has not retracted from his statement. It was asked to the assessee vide order sheet noting dated 04.02.2013 as to why the income of Rs.4,62,17,350/- should not be added back to your total income as you have stated in the statement under oath during the survey action. In response to the same, the assessee submitted as under: 1) Your attention is invited to Question Number 25 and the answer thereto. The assessee on his own has stated that the estimated income from March, 2010 would be in the vicinity of 9.5 Crores. A reading of the response itself makes it clear that the same is only a statement of estimate and not a declaration of income. 2) It is also clear from the question that it is the voluntary statement made by the assessee. 3) As discussed at the time of survey and agreed by the assessee, it was decided to offer income of Rs.2.6 Crores for the A.Y.2008- 09 and Rs.2.2 Crores for A.Y.2009-10 and the balance in the year ending 31.03.2010.
4) Accordingly in response to question Number 25, the assessee answered to reflect this understanding. The assessee in terms of this understanding revised the return for AY 2008-09 and AY 2009-10 paid the taxes thereon. The assessments for these years have been completed accordingly. 5) The assessee has thus acted in consonance with the understanding and filed its return and paid taxes there under.”
3. Feeling aggrieved by the order passed by the Assessing Officer, the assessee filed appeal before the Ld. CIT(Appeals) who has granted relief to the assessee as per Para 5.3.2 to the following effect:
“5.3.2 I am inclined to agree with contention of the appellant. I find that the AO in the assessment order could not bring out any materials least to say „concrete material‟. The addition was made solely on the basis of the statement given by the appellant without any corroborative and or incriminating documents. I find that the amount of Rs.9.5 Crores which has been referred to both by the AO and the appellant has been explained by the appellant as pertaining to three different assessment year as mentioned above. I also find that the AO had considered the statement itself only as chronology of events and also the same as „concrete material‟ for making such a huge addition. I agree with the appellant that such an addition based on statement only was uncalled for. Judicial decisions cited by the appellant support the arguments placed by the Ld. AR. Under this circumstances, I do not find any merit for sustaining such ad-hoc estimated addition of Rs.4,62,17,350/-. The addition so made is accordingly deleted. Ground No.1 raised by the appellant is accordingly allowed.”
4. The Ld. DR for the Revenue has also made following submissions with regard to the following effect:
(a) The assessee has made statement during the course of survey on 19.01.2010 based on the profit & loss account extracted from the computer of the assessee.
(b) The assessee in his answer to Question No.25 of his statement recorded on oath had stated that apart from the estimated profit of Rs.9.55 crores for A.Y. 2010-11, he further proposes to revise his return of income for A.Y. 2008-09 & 2009-10 to incorporate „additional income‟ of Rs.2.60 Crores and Rs.2.20 Crores respectively.
(c) The Ld. CIT(Appeals) has granted relief to the assessee without appreciating the answers of the question asked to the assessee during the course of survey and held that the addition was made solely on the basis of the statement given by the assessee without any corroborative or incriminating evidences.
(d) The Ld. CIT(Appeals) has erred in holding that the amount of Rs.9.5 crores which has been referred to by the Assessing Officer was a cumulative income for three assessment years and not for the assessment year 2010-11.
Per contra, the Ld. AR of the assessee submitted that the Ld. CIT(Appeals) has granted relief based on the profit and loss account prepared by the assessee after survey. It was also the contention of the Ld. AR of the assessee that the Assessing Officer has not doubted/challenged the authenticity of the profit and loss account submitted by him and therefore, the Ld. AR prayed for upholding the order of the Ld. CIT(Appeals).
We have heard the rival contentions and perused the material available on record. We find that the basis for making addition amounting to Rs.4,62,17,350/- was not only the statement recorded by the Revenue during the course of survey but also the profit and loss account extracted from the computer system of the assessee on the basis of which the assessee has disclosed his income at Rs.8.63 Crores as on 19.01.2010. The Ld. CIT(Appeals) has failed to appreciate the statement of the assessee and further failed to examine the profit and loss account retrieved at the time of survey which was admitted to be correct by the assessee. On the basis of this extracted profit and loss account from the computer for the relevant assessment year upto 19.01.2010, the assessee has declared his income of Rs.8.63 Crores . The assessee on his own in reply to Question No.25 had over and above the already agreed income of Rs.8.63 Crores have also admitted that he would have an income of Rs.9.5 Crores (inclusive of Rs.8.63 Crores) upto 31.03.2010. Besides that the assessee had also declared the additional income of Rs 2.60 Crores and Rs. 2.20 Crores for the assessment year 2008- 09 and 2009-10 respectively.
6.1 We are of the opinion that the Ld. CIT(Appeals) had wrongly read the statement of the assessee and have further failed to appreciate the accounts as on 19.01.2010 were duly admitted and acknowledged by the assessee as correct. Hence, the right course would be for the Ld. CIT(Appeals) to freeze the profit and loss account of the assessee upto 19.01.2010 and thereafter, the profit and loss account for the remaining period was required to be re- casted and based on that profit of the assessee should have been calculated. Needful was not done by the Assessing Officer or by the Ld. CIT(Appeals). In the light of the above, we deem it appropriate to remand the matter to the file of the Ld. CIT(Appeals) with the following directions:
(i) Account extract as on 19.01.2010 and admitted by the assessee during the course of survey would remain unchanged (ii) Post 19.01.2010, the assessee will produce the profit and loss account and submit the profit earned by the assessee in the remaining period i.e. 19.01.2010 to 31.03.2010.
(iii) The Ld. CIT(Appeals) shall examine the profit and loss account post 19.01.2010 and add the profit earned by the assessee for this period to the income already declared by the assessee on 19.01.2010 i.e. Rs.8.63 Crores.
(iv) The Ld.CIT(Appeals) shall pass the order after following the principles of natural justice and after giving reasonable opportunity of hearing to the assessee.
In the result, appeal of the Revenue is allowed for statistical purposes subject to the directions mentioned above.
Order pronounced on 12th day of February, 2020.
Sd/- Sd/- D. KARUNAKARA RAO LALIET KUMAR ACCOUNTANT MEMBER JUDICIAL MEMBER ऩुणे / Pune; ददनाांक / Dated : 12th February, 2020. SB आदेश की प्रनिलऱपप अग्रेपषि / Copy of the Order forwarded to : अऩीऱाथी / The Appellant. 1. प्रत्यथी / The Respondent. 2.
The CIT(Appeals)-3, Pune.