A.SUBRAMANIAM,CHENNAI vs. ITO NON CORPORATE WARD 2(4), CHENNAI

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -2, Chennai, dated 19.12.2017 and pertains to assessment year 2011-12.

Shri F.C. Jain, the Ld. representative for the assessee, submitted that the assessee is engaged in the business of pawn broking. According to the Ld. representative, on 10.04.2011, the Flying Squad of Election Commission inspected the premises of the assessee and found cash of ₹2 lakhs. The Investigation Wing of Income-tax Department also made a survey in the premises of the assessee. During the course of survey operation, according to the Ld. representative, the assessee accepted that he will offer the amount of ₹2 lakhs for taxation. According to the Ld. representative, other than the statement recorded in the course of survey operation, no other material is available on record to suggest that the cash of ₹2 lakhs found by the Flying Squad of Election Commission, was earned by the assessee. Placing reliance on the various judgments of High Courts, the Ld. representative submitted that the Revenue authorities cannot make assessment only on the basis of statement recorded during the course survey operation. According to the Ld. representative, the Revenue authorities are not empowered to record a sworn statement during the course of survey operation, therefore, the statement recorded by the Revenue authorities from the assessee cannot have any evidentiary value.

Shri F.C. Jain, the Ld. representative for the assessee, further submitted that even for argument sake that the income has to be assessed in the hands of the assessee, it cannot be assessed during the year under consideration. According to the Ld. representative, the cash was admittedly found in the premises of the assessee on 10.04.2011 which falls in the financial year 2011-12 and assessment year 2012-13. Therefore, according to the Ld. representative, there cannot be any assessment during the year under consideration.

On the contrary, Shri B. Sagadevan, the Ld. Departmental Representative, submitted that admittedly a cash of ₹2 lakhs was found in the residential premises of the assessee. The assessee admitted that he will offer the same for taxation. On a query from the Bench, when the cash was found on 10.04.2011 during the assessment year 2012-13, how can there be assessment of ₹2 lakhs for the assessment year 2011-12? The Ld. D.R. clarified that since the assessee accepted the cash and agreed to offer the same for taxation, the same was taxed. If the Tribunal feels that it has to be assessed during the assessment year 2012-13, the Ld. D.R. submitted that a direction may be issued to the Department to assess the same for the assessment year 2012-13.

I have considered the rival submissions on either side and perused the relevant material available on record. Admittedly the cash was found on 10.04.2011 which falls in the financial year 2011-12 and assessment year 2012-13. The assessment year under consideration is 2011-12. When the cash was found by the Revenue authorities, the presumption is that the assessee earned the money during the financial year in which the same was found. In the case before us, no other material, except the statement of the assessee, is available on record to suggest that the assessee has earned any money. It is a well settled principle of law that during the course of survey operation, the Revenue authorities are not empowered to administer oath to the deponent. Therefore, any statement recorded without administering statement cannot have any evidentiary value. Since the cash was found on 10.04.2011 and admittedly it falls in the financial year 2011-12 and assessment year 2012-13, this Tribunal is of the considered opinion that there cannot be any assessment during the year under consideration. Therefore, this Tribunal is unable to uphold the orders of the lower authorities. Accordingly, the addition of ₹2 lakhs made by the Assessing Officer as confirmed by the CIT(Appeals) is deleted.

In the result, the appeal filed by the assessee is allowed.