SH SURESH CHAND AGARWAL,AGRA vs. ACIT 4(1), AGRA

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ITA 357/AGR/2015Status: DisposedITAT Agra07 February 2018AY 2011-1212 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the assessee failed to provide detailed computation for the reduced surrender amount, unlike in a previous assessment year. Therefore, the matter was remitted back to the Assessing Officer for verification.

What were the facts?

During a survey, the assessee initially surrendered Rs. 1.50 Crore as additional income. However, in the return, only Rs. 1.10 Crore was disclosed, leading the Assessing Officer to add the difference of Rs. 40 Lacs. The assessee claimed the initial surrender was conditional and retracted part of it.

What were the issues?

Whether the addition of Rs. 40 Lacs is sustainable when the assessee retracted a portion of the surrender made during survey, and failed to provide supporting documentation.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(4)Show list

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Income Tax Appellate Tribunal, AGRA BENCH, AGRA

Before: SHRI A.D. JAIN & DR. MITHA LAL MEENA

For Appellant: Shri Pankaj Gargh, Avocate
Hearing: 10/01/2018Pronounced: 07/02/2018

PER, DR. MITHA LAL MEENA, AM:

The appeal, by Revenue is directed against the order of the

Commissioner of Income Tax, (Appeals)-II Agra, [herein after referred to as “the CIT(A)”], dated 19.03.2015 in respect of AY 2011-12 on the following grounds: “1. Because the Ld. CIT(A) has wrongly, illegally and arbitrarily confirmed the addition of Rs. 40 Lac made by the Assessing Officer only on the basis of statement of the assessee recorded during the course of survey in the absence of any adverse material to substantiate the addition. 2. Because the Ld. C1T(A) has erred both in law and on facts in rejecting the appellant's submission and in ignoring the fact that there is no material whatsoever in the possession of the Assessing Officer to prove the addition of Rs. 40 Lac which is over and above

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the amount which has been surrendered by the assessee in his return of income. 3. Because in the revised return filed the assessee surrendered Rs.1,10,00,000/- and breakup of the same on the basis of seized material was filed before Ld. CIT(A) and also before the Assessing Officer. Ld. CIT(A) has wrongly mentioned in the appellate order that the assessee failed to establish that the admission made in the statement at the time of survey was wrong by not giving a detailed computation of income from impounded document stated to be only of Rs. 1,10,00,000/-. 4. Because under the facts and circumstances of the case the addition of Rs. 40 Lac being wrong, arbitrary and bad in law deserves to be deleted.” 2. The assessee has raised a common issue, being replicated into

the four grounds of appeal, thereby objecting the action of the Ld. CIT(A)’s confirming the addition of Rs. 40 Lac, on the basis of statement of the assessee recorded during the course of survey, in

the absence of adverse material to substantiate the addition.

3.

The assessee is a colonizer and also works on contract.

During the course of survey proceeding, various incriminating

documents were found and impounded from the business premises

of the assessee. On being confronted with these documents, the

assessee admitted that it had not shown its complete income in the

books of account. Considering this fact and on the basis of various

incriminating documents found during survey, the assessee offered to

pay tax on additional income of Rs.1,50,00,000/- for AY 2011-12 in

the statement recorded during survey. However, later on the AO

3 ITA No. 357 /AGR/2015 Assessment Year: 2011-12

noticed from the return of income that the assessee has shown

additional income of Rs.1,10,00,0007- only. Therefore, the AO vide

his letter dated 13.01.2014 required the assessee to show cause as

to why the difference of income of Rs.40,00,000/- (Rs.1,50,00,000 -

Rs.1,10,00,000) may not be treated as his additional income of the

assessment year 2011-12 and added to the total income of the

assessee. In the reply filed by the assessee he submitted before the

Assessing Officer that he is a heart patient and had under gone heart

surgery in the month of December 2013 and due to the surgery and

to purchase peace in the life, he is surrendering additional income of

Rs.40,00,000/- subject to the condition that the department will initiate

any penalty proceedings against him. Accordingly, the Assessing

Officer made addition of Rs.40,00,000/- to the returned in come of the

assessee.

4.

The ld. CIT(A) observed that : “…….the Id. AR has taken repeated adjournments but no calculation of undisclosed income of Rs.1,10,00,000/- declared in the return on the basis of examination of impounded document, has been filed and finally, a plea has been taken in hearing held on 18.03.2015 that similar conditional surrendered income was considered and addition made thereof was deleted by Hon'ble ITAT, Agra in case of the present assessee for AY 2009-10 and hence, for AY 2011-12 (the assessment year under consideration) also, such addition made on the basis of conditional surrendered income should be deleted. This plea of the Id. AR cannot be accepted because as I have already

4 ITA No. 357 /AGR/2015 Assessment Year: 2011-12

discussed above that the Hon'ble ITAT, Agra has deleted the amount of Rs.14 lac in AY 2009-10 stating to be conditional surrendered income because in that assessment year, detailed calculation of income of Rs.36 lac out of total surrendered income of Rs.50 lac was filed and such calculation was also shown to the Hon'ble ITAT, Agra during the course of hearing of the appeal. In the present case under appeal for AY 2011-12, no such details of computation of income of Rs.1,10,00,000/- has been filed, Therefore, I could not examine the correctness of the amount of Rs.1,10,00,000/- declared in the return filed by the assessee as unrecorded income computed on the basis of impounded document. Coupled with this fact, I have also found that the assessee is wavering in his stand taken with respect to unrecorded income earned by him, first he has declared Rs.1,50,00,000/-, then he has retracted to Rs.1,10,00,000/- and again he has offered the balance amount of Rs.40 lac for taxation by putting condition for non-imposition of penalty u/s 271(1)(c). I have already discussed by relying on the decision of the Hon'ble Supreme Court in case of Mak Data (P) Ltd. Vs CIT-II (supra) that such conditional surrender has no sanction of law and once, an amount has been offered by the assessee for taxation, he cannot dispute that amount in appeal as it has been Allahabad High Court in case of Sterling Machine Tool vs. CIT (supra). Therefore, contrary to the facts of the case of the assessee for AY 2009-10, during the year under consideration, I have found that there is no basis for retraction of the surrendered amount from Rs.1,50,00,000/- to Rs. 1,10,000/-. Thereafter again, no basis has been given for offering the difference amount of Rs.40,00,000/- during the assessment proceeding for taxation but such offer made by putting up a condition of non imposition of penalty has been found to be not being as per the provisions are of the Income Tax Act because under the Income Tax Act, if any offer or surrender of income is made for taxation, such offer or surrender is accepted by the Assessing Officer without accepting any condition regarding non-imposition of penalty as the decision on imposition of penalty is to be taken as per law as provided under the Income Tax Act as held by the Hon'ble Supreme Court in the case of Mak Data (P) Ltd. Vs CIT-U (supra). As per law, such income surrendered by the assessee during the assessment proceedings is to be taxed as income of the assessee

5 ITA No. 357 /AGR/2015 Assessment Year: 2011-12

(appellant) as he has failed to explain the basis for his retraction by not giving detailed calculation of income of Rs.1,10,00,000/- made on the basis of impounded document as it was done in AY 2009-10. While making retraction of the amount of income from Rs.1,50,00,000/- made during survey to Rs. 1,10,00,000/- shown in the return of income filed, the Ld. AR has referred to a decision of Hon'ble Allahabad High Court in the case of Dr. S.C. Gupta Vs. CIT reported in 248 ITR 782 in which, it has been held that it is a settled law that though an admission is an extremely important piece of evidence, it cannot be said to be conclusive and it is open to the person who has made to show that, it is not correct. I have considered this decision and I find that this decision is against the assessee because after referring to the above principle of surrender as held by the Hon'ble Supreme Court in Puilangode Rubber Produce Co. Ltd. Vs. State of Kerala (1973) 91 ITR 18 (SC), the Hon'ble Allahabad High Court has held that a statement made voluntarily by the assessee could form the basis of assessment and mere fact that the assessee retracted the statement, could not make the statement unacceptable. In this regard, it has also been clarified in this decision that the burden lay on the assessee to establish that the admission made in the statement at the time of survey was wrong and in fact, there was no additional income. The relevant part of this decision is reproduced as under for a ready reference - "As regards the assessee contention that the statement having been retracted the assessing officer should have independently come to a conclusion that there was additional income as sought to be assessed and that there was no material to support that there was such income, this contention in our view is not correct. As held by the Supreme Court in Pullangode Rubber Produce Co. Ltd. Vs. State of Kerala (1973) 91 ITR 18 (SC) an admission is an extremely important piece of evidence thought, is not conclusive. Therefore a statement made voluntarily by the assessee retracted the statement could not make the statement unacceptable. The burden lay on the assessee to establish that the admission made in the statement at the time of survey was wrong and in fact there was no additional income. This burden

6 ITA No. 357 /AGR/2015 Assessment Year: 2011-12

does not even seem to have been attempted to be discharged. Similarly, P.K. Palwankar Vs. CGT (1979) 117 ITR 768 (MP) and CIT Vs. Mrs. Doris S. Luiz (1974) 96 ITR 646 (Ker) on which also, Ld. Counsel for the assessee placed reliance are of no help to the assessee. The Tribunals order is concluded by findings of fact and in our view no question of law arises. The application are accordingly, rejected." In the present case under appeal, since the assessee (appellant) has failed to establish that the admission made in the statement at the time of survey was wrong by not giving a detailed computation of his income from impounded document stated to be only Rs.1,10,00,000/- instead of Rs.1,50,00,000/- surrendered in the statement recorded during survey and he could also not prove that such statement was recorded under duress, by following the above decision of the Hon'ble Allahabad High Court, the total amount of surrendered income of Rs.1,50,00,000/- should be assessed in the hand of the assessee instead of Rs.1,10,00,000/- shown in the return of income. Therefore, I confirm the addition of Rs.40 lac and all the grounds taken in appeal disputing this addition are dismissed.” 5. Ld. Counsel submitted that the assessee made surrender of

income as per statement recorded, during the course of survey (APB, Pages 5 to 8), as follows:

AY 2009-10 Rs.50 lacs, AY 2010-11 Rs.1.00 crore and AY 2011-12 Rs.1.50 crore 6. The ld. Counsel further submitted that the assessee has declared in the return of income of Rs.36 lacs as against Rs. 50.00

lacs for AY 2009-10, Rs.1 crore for AY 2010-11 and Rs.1.10 crore

7 ITA No. 357 /AGR/2015 Assessment Year: 2011-12

against 1.50 for AY 2011-12 against the surrendered income as per

the statement recorded during the course of survey. He contended

that even if the assessee has not filed any breakup even then the

entire material was with the Assessing Officer. She could have

verified the amount shown as additional income in the return filed with

the seized material. Without verifying with the seized material, the

Assessing Officer has made addition only on the basis of surrender

being made during the course of survey which is legally wrong.

7.

In support, he relied upon the order passed in his own case in

ITA No. 191/Agr/2013 AY 2009-10, dated 31.07.2013 by ITAT Agra Bench, where it is observed that “the reply of the assessee filed before the Assessing Officer at the assessment stage is furnished on

record, in which the assessee explained each and every seized paper

and for several documents, it was explained that the same do not

relate to the assessee or that the profit margin was very lower. The

detailed calculation submitted before the Assessing Officer was not

subjected to any verification by the authorities below. Thus, the

assessee on the basis of the impounded material during the course of

survey has been able to show that admission made at the time of

survey surrendering the amount of Rs.50 lacs was not correct and did

not show correct state of facts. The figures/calculation shown by the

8 ITA No. 357 /AGR/2015 Assessment Year: 2011-12

assessee was based on factual figures, in which no mistakes have been pointed out by the authorities below as well as the by the ld. DR during the course of arguments. Therefore, in the facts and circumstances of the case, the addition of 14,00,000/- could not be made against the assessee on the basis of mere admission.”

8.

We find that the assessee has surrendered Rs.1.50 Crore whereas in the return he has disclosed additional income of Rs. 1.10 Crore only. The question is to decide whether the difference of Rs. 40 lacs can be treated as additional income of the assessee in view of order of ITAT Agra, (Supra) in the assessee’s own case.

9.

The ld CIT(A) has discussed that the ITAT, Agra has deleted the amount of Rs.14 lac in AY 2009-10 stating to be conditional surrendered income because in that assessment year, detailed calculation of income of Rs.36 lac out of total surrendered income of Rs.50 lac was filed and such calculation was also shown to the ITAT, Agra during the course of hearing of the appeal; that in the present case under appeal for AY 2011-12, no such details of computation of income of Rs.1,10,00,000/- has been filed, and therefore, he could not examine the correctness of the amount of Rs.1,10,00,000/- declared in the return filed by the assessee as unrecorded income

9 ITA No. 357 /AGR/2015 Assessment Year: 2011-12

computed on the basis of impounded document. Coupled with this

fact, he has also found that the assessee is wavering in his stand

taken with respect to unrecorded income earned by him, first he has

declared Rs.1,50,00,000/-, then he has retracted to Rs.1,10,00,000/-

and again he has offered the balance amount of Rs.40 lac for

taxation by putting condition for non-imposition of penalty u/s

271(1)(c).

10.

since the assessee has failed to establish that the admission

made in the statement at the time of survey was wrong by not giving

a detailed computation of his income from impounded document

stated to be only Rs.1,10,00,000/- instead of Rs.1,50,00,000/-

surrendered in the statement recorded during survey and he could

also not prove that such statement was recorded under duress, by

following the above decision of the Hon'ble Allahabad High Court, the

total amount of surrendered income of Rs.1,50,00,000/- should be

assessed in the hand of the assessee instead of Rs.1,10,00,000/-

shown in the return of income. Therefore, the Ld. CIT(A) has

confirmed the addition of Rs.40 lac and all the grounds taken in

appeal disputing this addition are dismissed.

10 ITA No. 357 /AGR/2015 Assessment Year: 2011-12

11.

On the objection of the ld. DR as regards to non-filing of

breakup of the additional income of Rs. 1.10 Crore and the finding of

the ld CIT(A), the ld. Counsel submitted pleaded that in that case my

case may kindly be sent back to the Assessing Officer for verification

of the additional income shown from the seized material and further

to file breakup of Rs. 1.10 Crore. as it was filed in A.Y. 2009-10. The

ld. Counsel contended that similar was the position in A.Y. 2009-10 in

which the Assessing Officer made the addition of Rs. 14 Lac being

the balance amount of the surrender made during survey and as

shown in the return filed. Hon'ble ITAT Agra Bench deleted the

addition.

12.

From the above, it emerges that in A.Y. 2009-10 breakup of the

amount of Rs. 36 lacs have been filed during the course of

assessment proceedings which was shown as additional income in

the return filed whereas in the year under consideration the breakup

of the amount of Rs. 1.10 Crore has not been filed according to the

authorities below.

13.

In view of the above, we remit this matter to the Assessing

Officer to verify the surrender of income of Rs.1.50 crores as per the

statement recorded during the course of survey with reference to

11 ITA No. 357 /AGR/2015 Assessment Year: 2011-12

impounded material resulting into impugned addition of Rs.40.00

lacs, as observed and confirmed by ld. CIT(A). The assessee is

required to furnish such details of computation of income of

Rs.1,10,00,000/- so that the Assessing Officer could examine the

correctness of the amount of Rs.1,10,00,000/- declared in the return

filed by the assessee as unrecorded income computed on the basis

of impounded document. The Assessing Officer should give sufficient

opportunity of being heard to the assessee as per the principle of

natural justice. No doubt, assessee shall cooperate in fresh

proceeding before the Assessing Officer.

14.

In the result, appeal of the assessee is allowed for statistical

purposes.

Order pronounced, in the open Court on 07/02/2018.

Sd/- Sd/- (A. D. JAIN) (DR. MITHA LAL MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated: 07/02/2018 Aks Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT

12 ITA No. 357 /AGR/2015 Assessment Year: 2011-12

ASSISTANT REGISTRAR

Date 1. Draft dictated (DNS) 22.01.2018 PS 2. Draft placed before author 06.02.2018 PS 3. Draft proposed & placed before the second member JM/AM 4. Draft discussed/approved by Second Member. JM/AM 5. Approved Draft comes to the Sr.PS/PS PS/PS 6. Kept for pronouncement on PS 7. File sent to the Bench Clerk PS 8. Date on which file goes to the AR 9. Date on which file goes to the Head Clerk. 10. Date of dispatch of Order.

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