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Income Tax Appellate Tribunal, BANGALORE BENCHES, “C” BENCH : BANGALORE
O R D E R PER CHANDRA POOJARI, A.M: This appeal by the assessee is directed against the order of the CIT(A)-6, Bangalore, dated 14-02-2020 for the AY.2015-16.
The assessee raised the following grounds of appeal: “1. The orders of the authorities below in so far as they are against the appellant, are opposed to law, equity, weight of evidence, probabilities, facts and circumstances.
2. The order of assessment is bad in law and viod-ab-initio for want of requisite jurisdiction especially, the mandatory requirements to assume jurisdiction u/s.148 of the Act did not exist and have not been complied with and consequently, the assessment requires to be cancelled. 3.Without prejudice to the above, the learned CIT(A) is not justified in confirming the assessment completed and consequent additions made by the learned A.O. in the assessment completed in the status of “individual” without appreciating that the appellant was liable for assessment in the status of “HUF” under the facts and in the circumstances of the appellant’s case.
4.Without prejudice to the above, the learned CIT(A) is not justified in sustaining the addition of a sum of Rs.65,50,000/- as additional income agreed to be offered at the time of survey by unreasonably rejecting the explanation tendered by the appellant under the facts and in the circumstances of the appellant’s case. 4.1.The addition made is purely on suspicion and surmise, assumptions and presumptions and contrary to materials on record and consequently, the same requires to be deleted. 5.The learned CIT(A) is not justified in sustaining the addition of a sum of Rs.15,27,852/- as cash deposits not reconciled by unreasonably rejecting the explanation tendered by the appellant under the facts and in the circumstances of the appellant’s case. 5.1.The addition made is purely on suspicion and surmise, assumptions and presumptions and contrary to materials on record and consequently, the same requires to be deleted. 6.Without prejudice to the right to seek waiver before the Hon’ble DG/CCIT, the appellant denies himself liable to be charged to interest u/s.234-A, 234-B and 234-C of the Act, which requires to be cancelled under the facts and in the circumstances of the appellant’s case”.
2.1. Ground No.1 is general in nature, which would not require any adjudication.
At the time of hearing, the assessee not pressed Ground Nos.2 & 3 accordingly, these are dismissed as not pressed.
The main issue in this appeal is with regard to sustaining addition of Rs.65.50 Lakhs (covers Ground Nos.4 & 4.1). The facts of the case are that there was a survey in this case on 26-09-2016 u/s.133A of the Income Tax Act (Act) at the premises of the assessee, carrying on business of contractor processing of 3 JCBS and 2 lorries, which are given for hire and also derives income from BDK Kalyanamantapa, Jakkur Road, Yelahanka and also carries on the business of contractor for the demolition of the premises for road widening. During the course of survey, statement was recorded on 26-09-2016 from the assessee and asked the following questions: Q.11. I am showing you a copy of sale deed dated 02-04-2011 executed between your wife Smt.B.Deepa and Mr.Mohammad Hussain Khan in respect of property at 71 and 72/2 with an extent of 7 acres 14 guntas and 1 acre 30 Guntas respectively. As per this deed your wife had paid Rs.8,30,000/- per acre totalling Rs.74,70,000/-. You are hereby requested to give details of the source of this investment and confirm this payment has been accounted in her books of accounts. Ans. This transaction was done by me on behalf of my wife and the amount paid by me from my business income in the year 2011-12. Since this transaction is taken long back I don’t remember the whether this amount has been accounted in my books of accounts. To maintain peace with department I voluntarily declared a sum of Rs.1,35,00,000/- as my income for the year 2014-15 relevant to assessment year 2015-16. Accordingly I will file my return and pay the applicable tax and interest. Q.12. On verification of your Bank statements with your bill and vouchers it is found a sum of Rs.15,27,862/- deposited in cash and was not recorded in your cash books. Please give the reason why it is not accounted in your books. Ans. I derive income from hire charges from vehicles and receipts from convention hall. Soon I received advances by cash from convention hall booking I deposit the same in to my bank account. However in few instances the customers have cancelled the bookings and refunded their amount in such cases the amount has not been recorded in my cash book. Hence there is variation. Q.13. Please give details of such cancellations and the mode of refund given to the customers. Ans. The exact details cannot be produced as such details were not maintained. In this circumstances, I voluntarily declare the amount of Rs.15,27,862/- as my income for the year 2014-15 relevant to assessment year 2015-16. 4.1. Later, the assessee filed the return of income as follows:
4.2. Later, the assessment has been framed on 28-12-2018 u/s.143(3) r.w.s.147 of the Act as follows:
With this I conclude the assessment as under:- Income from contracts as declared : Rs.12,50,000/- Rental receipts as declared : Rs.14,45,010/- Income from other sources (including additions of Rs.74,50,000) : Rs.78,32,278/- ------------------------- Total Income : Rs.1,05,27,297/- Add: Addl.Income agreed to be offered At the time of survey not declared in the Return of Income : Rs.65,50,000/- Cash deposits not reconciled : Rs.15,27,852/- ------------------------- Total taxable income : Rs.2,91,32,446/- Agrl.income as declared : Rs. 4,00,000/- -------------------------- 5. Now, the contention of the Ld.AR is that the document procured during the course of survey which reflect the sale consideration paid by the assessee not relating to the assessment year under consideration and relating to AY.2012-13 as the sale deed was dt.02-04-2011. Even otherwise, the statement recorded during the course of survey proceedings u/s.133A of the Act cannot be the basis for any addition in the assessment as held by the Hon’ble Supreme Court in the case of CIT Vs. S.Khader Khan Son [352 ITR 480] (SC). Further he submitted that the assessee while filing the return of income on 03-05-2016 offered the income what is more than required even as per the survey material and it cannot be said that the assessee has concealed any income in this assessment year on this count. Further, he submitted that even as per statement recorded u/s.133A of the Act on 26-09-2016 cannot be considered as a conclusive evidence to make any addition in assessment unless it is supported by any corroborative material. It is submitted that there is no corroborative material in the hands of the AO and even the statement recorded u/s.133A of the Act has been complied by the assessee by offering total income of Rs.140 Lakhs (Rs.65.5 Lakhs u/s.44AD and Rs.74.5 Lakhs as income from other sources – lending of ACB truck/tractor).
On the other hand, Ld.DR submitted that the assessee himself offered additional income of Rs.1.35 Crores for the AY.2015- 16 and the assessee has not kept his promise by declaring this additional income in his return of income. Hence, the AO made addition of Rs.65.50 Lakhs on this count. The assessee was not able to show any evidence supports his case. Ld.DR relied on the following judgment(s): i. Dayawanti Gupta Vs. CIT [390 ITR 496] (Del)
Wherein held that, “where the statement made under oath and were part of record and continued to be so their probative value is un- deniable; Occasion for making them arose because of search and seizure that occurred and seizure of various documents, etc. that pointed out to un-declared income, hence assessee’s argument that they could not have acted upon or given any weight is insubstantial and meritless”.
We have heard both the parties and perused the material on record. In this case, the reason for addition of Rs.65.50 Lakhs was statement recorded u/s.133A of the Act during the course of survey on 26-09-2016. In the survey proceedings, the assessee offered additional income of Rs.1.35 Crores. However, while filing the return of income on 24-10-2016, the assessee has shown gross receipt of Rs.140 Lakhs and computed the income as follows:
Sr.No. Receipts (Rs) Net Income (Rs) 1. 65.50 Lakhs Income at 8% 5,24,000/- 2. 74.50 Lakhs Expenditure(-) 7,65,000/- 66,85,000/- ----------------- ----------------- Total 72,09,000/- ----------------- The above additional income has been offered as rental income from machinery and under income from other sources after claiming expenditures of Rs.7.65 Lakhs. However, in respect of balance amount of Rs.65.50 Lakhs, he declared it as addition to contract receipt and estimated the income of contract receipts @8% thereof. Thus, the assessee offered additional income of Rs.72.09 Lakhs as tabulated above. Now, the contention of the Ld.AR is that the assessee has offered Rs.65.50 Lakhs as gross receipt out of it, offered 8% on it as net income and he has complied with the statement recorded u/s.133A of the Act. Further, it was submitted that the word ‘income’ is loosely termed as ‘receipt’ vis-à-vis in common parlance. According to him, he does not know the difference between the word ‘income’ vis-à-vis ‘receipts’ and he mis- understood the concept of income while answering the question during the course of survey and it was also mis-understood by the AO. Without prejudice to this, it was submitted that statement recorded under survey cannot be the basis for assessment without any corroborative material as held by Hon’ble Supreme Court in the case of CIT Vs. S.Khader Khan Son [352 ITR 480] (SC). In our opinion, there is a force in argument of the Ld.AR with regard to considering these statements recorded u/s.133A for making addition in assessment unless it is supported by corroborative materials. In the present case, the assessee offered an additional receipts of Rs.1.40 Crores while filing the return of income as against net income of Rs.1.35 Crores offered during the course of survey vide statement recorded u/s.133A of the Act. However, the assessee offered only a sum of Rs.66.85 Lakhs as additional net income as income from other sources and with regard to the balance amount of Rs.65.50 Lakhs he has considered only income @8% on it i.e., Rs.5.24 Lakhs. In our opinion, these additional incomes are not based on any supportive material other than the sworn statement recorded by the department. As held by the Hon’ble Supreme Court in the case of CIT Vs. S.Khader Khan Son [352 ITR 480] (SC). material collected during the course of survey u/s.133A of the Act have no evidentiary value and that addition could not be made solely on that basis. Being so, in the present case, without any corroborative material, the AO made addition of Rs.65.50 Lakhs, over and above the income offered by the assessee at Rs.72.09 Lakhs. Had it been there any material in support of this addition, we could have supported the case of the department. In our opinion, there is no enough material to sustain this addition made by AO. Further, the judgement relied on by the Ld.DR is not relating to the material collected during the course of survey u/s.133A of the Act. In other words, it is relating to evidence collected during the course of search action u/s.132 of the Act. Being so, the case law relied on by the Ld.DR has no application to the present facts of the case. Accordingly, this ground of appeal of the assessee is allowed and the addition is deleted.
8. Ground Nos.5 and 5.1 is with regard to sustaining addition of Rs.15,27,852/- as cash deposited to various accounts. The AO made an addition of Rs.15,27,852/- towards un-explained cash deposits to assessee’s bank account. 8.1. The Ld.AR submitted that the assessee for the last fifteen years declared huge income i.e., for the AYs.2001-02 to 2015-16 and during this period the assessee has earned various incomes and this was available to the assessee to deposit it into bank account. 8.2. The Ld.DR submitted that the assessee has not explained specific sources for depositing money into these accounts. Accordingly, he supported the orders of lower authorities. 8.3. We have heard both the parties and perused the material on record. It is seen from the record that the assessee has been income tax assessee from AY.2001-02 to 2015-16 and declared income under the head income from business, rental income, agricultural income and other income. It is more than a sum of Rs.2 Crores and paid taxes on these incomes around Rs.62.11 Lakhs. Being so, the assessee cannot be considered as penny less person and in our opinion, the telescopic benefit is to be given out of the declared income in these assessment years as reflected in statement, placed at Pg.80 of the paper book. In our opinion, this meagre amount of Rs.15,27,852/- cannot be considered as un-explained income of the assessee and the same should be considered as deposited by the assessee into his own bank account from his known sources of income. Accordingly, we delete the addition on this count and allow this ground of appeal raised by the assessee.
9. In the result, the appeal of assessee is allowed. Order pronounced in the open court on 7th April, 2022