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Income Tax Appellate Tribunal, MUMBAI BENCHES “D”, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI N.K. PRADHAN
ORDER PER N.K. PRADHAN, A.M The captioned appeals have been filed by the Revenue. The relevant assessment year is 2006-07. The appeals are directed against the order of the CIT(A)-XIX, Mumbai and these arise out of the assessment completed under section 143(3) of the Income Tax Act, 1961 (hereinafter “the Act”). In this batch of appeals, the controversy raised being similar, they were heard analogously and are disposed of by a common order.
The first two grounds raised by the Revenue in this appeal are that the ld. CIT(A) erred in deleting the addition of Rs.1,00,10,000/- made in the case of Mr. Sunil Kumar O Kochhar and Rs.85,50,000/- in the case of Mrs. Renu S Kochhar.
Briefly stated that facts are that a survey action under section 133A of the Act was carried out by the Department at the business premises of the assessees on 23/09/2005. A statement was recorded under section 133A on 23/09/2005 wherein a disclosure of Rs. 1,00,10,000/- was made by Mr. Kochhar and Rs. 85,50,000/- by Mrs. Kochaar. Register “Sunlife Account Book” in the case of Mr. Kochhar and “Sunny Deluxe Accounts Book” in the case of Mrs. Kochhar were impounded during the course of survey. Mr. Kochhar is engaged in the business of recruitment of man power particularly to Gulf countries in the name & style of Ambe Consultancy services, a proprietary concern in which he is holding the license issued by the Ministry of Govt. of India . The nature of business of Mrs. Kochhar is rendering services for tours and travels. The AO during the assessment proceedings asked the assessees to explain as to why disclosure made during course of survey on 23/09/2005 should not be added back to their income. The assesees submitted that the disclosure was not voluntary but a forced one which has been immediately retracted.
3.1 Mr. Kochhar referred to his affidavit dt. 27/09/2005 together with the letter of the same date. He also relied on the affidavits of his three employees namely (i) Bhaskar P. Pawar, (ii) Anand M. Raorane, and (iii) Mr. Vikas Bapat, all filed before the AO. It was also stated by him that the entries from Sl. No. 1- 1400/- on page 1 to 43 showing names, pass port numbers, categories and amount in register were got written and entered in the register by the survey officers and the same are therefore fabricated and false ones. The AO however, relied on the statement recorded on 23/09/2005 under section 133A. He came to a finding that the assessee had given declaration of additional income of Rs. 1,00,10,000/- o f income and cheques for the paying the tax on the said income have also been given and therefore, made an addition of the above amount to the total income of the Mr. Kochhar during the year under consideration.
3.2 Mrs. Kochhar filed an affidavit before the AO on 26/09/2005 making a retraction of the disclosed income. She also filed another affidavit on 29/11/2008 stating that the disclosure from her was a forced one based on fabricated entries. The AO came to a finding that Mrs. Kochhar had offered Rs.85,50,000/- declared in the course of survey and therefore, he made an addition of the above amount to the total income of the assessee during the year under consideration.
3.3 While making the above additions, the AO has referred to the decisions stating that the statement given by the assessee at the time of survey / search action is binding on him and any retraction made by him has no meaning at all. In this regard he relied on the decision in the case of Hiralal Magan Lal and Co. vs. DCIT 96 ITD 113 (Mum); Ramesh Chandra and Co. vs. CIT 168 ITR 375(Bom), Hotel Kiran vs. ACIT 82 ITD 453 Pune; Video Master vs. JCIT 83 ITD 102 (Bom); Ramesh T. Salve vs. ACIT 75 ITD 75 (Mum); Smt. Basanti Sethi vs. ACIT ; Ram Jas Nawal vs. CIT 183 CTR (Raj) 144; Dr. S.C. Gupta vs. CIT 248 ITR 782 (All).
The ld. CIT(A) noted the following submission made by the assessee before him.
“(i) The survey u/s 133A was conducted in an illegal and irregular manner. The survey party resorted to brazen abuse of powers and acted in a high-handed manner. (ii) The survey party ‘fabricated’ the evidence in the ‘Sunlife Account Book’ and “Sunny Deluxe Account” by making bogus entries. The statement recorded u/s 133A was a forced one obtained under duress. (iii) The statement recorded u/s 133A has no evidentiary value. (iv) The statement recorded u/s 133A is uncorroborated, not credible and so cannot be treated as evidence. Moreover, the appellant has filed two affidavits of retraction, which remain uncontroverted.” The Ld. CIT(A) found that the assessees had written to the then Chief Commissioner of Income Tax and sought redressal of their grievances. He came to a finding that there is merit in the contention of the assessees that the survey party fabricated evidence in the form of entries in the “Sunlife Account Book ” and “Sunny Deluxe Account Book”. He has mentioned in his appellate order that there is truth in this charge if one peruses the entries in “Sunlife Account Book” and “Sunny Deluxe Account Book” on the basis of evidence. He has summed up his finding that not only statement has been recorded under duress but evidence has been planted. The fact that cheques were obtained in pursuant to statement under section 133A also strengthens the believe that it was obtained under duress and coercion.
4.1 The ld. CIT(A) also found that certain portion of the entries (981 to 1400) in “Sunlife Account Book” has been entered by the survey party themselves. He also observed that the entries in “Sun Deluxe Account Book” were entered by the survey party. Thus, the very basis on which the “ confession” was obtained gets knocked out. The genuineness of the entry in the above book stands exposed. The AO has simply gone by the sanctity of the statement recorded under section 133A which stands impeached. A statement recorded in the course of the survey can be made the basis of assessment only if it is linked to corroborative evidence. In the present case, there is a “planted evidence” which cannot be a substitute for corroborative evidence. In view of the above facts, the ld. CIT(A) deleted the addition of Rs. 1,00,10,000/- made by the AO in the case of Mr. Kochhar and Rs.85,50,000/- in the case of Mrs. Kochhar for the impugned assessment year.
The ld. DR relied on the assessment order passed by the AO. She made a specific reference to question no. 10 and its answer recorded from Mr. Kochhar u/s 133A during the course of survey action on 23/09/2005. Also she made specific reference to question no. 7 and its answer recorded from Mrs. Kochhar u/s 133A during the course of survey action on 23/9/2005.
The ld. Counsel of the assessee relied on the affidavit of Mr. Kochhar filed on 27/09/2005 and the letter of retraction filed on the same date. Also he relied upon the affidavit of the three staff members namely (i) Bhaskar P. Pawar, (ii) Anand M. Raorane, and (iii) Mr. Vikas Bapat, filed on 27/09/2005 before the AO . He also referred to the affidavit dated 26/09/2005 and 29/11/2008 filed by Mrs. Kochhar before the AO .He further stated that the decisions referred to by the AO in his assessment order relates to statement recorded under section132(4) of the Act, not to section 133A . It was further stated by him that statement can be recorded under section 131 not under section 133A.
6.1 The ld. Counsel referred to the application filed by the assessee under Rule 27 of the ITAT Rules 1963 defending the order passed by the ld. CIT(A) .
We have considered the rival submissions carefully and also perused the material placed on record before us. We find that the assessees filed, immediately after the survey action, retraction letter addressed to the AO enclosing therewith the affidavit. The onus then shifted to the Department. What we find here is that the assessees simultaneously filed letter on 27/09/2005 addressed to CCIT-I , CCIT-X and CIT-19 Mumbai, addressing his/her grievances. The CIT-19 sent a letter to the assessees on 28/09/2005 calling for a meeting on 04/10/2005. The cheques taken by the survey officials were returned back to the assessees.
7.1 Be it stated that the decisions relied on by the AO do not relate to the import of statement recorded under section 133A of the Act.
7.2 In the present case statement has been recorded under section 133A of the Act. In Paul Mathews & Sons vs. CIT (2003) 263 ITR 101, 108 (Ker.), it has been held that section 133A(3)(iii) enables the authority to record the statement of any person which may be useful for, or relevant to, any proceeding under the Income-tax Act. Section 133A, however, enables the Income-tax authority only to record any statement of any person which may be useful, but does not authorize taking any sworn statement. On the other hand, one finds that such a power to examine a person on oath is specifically conferred on the authorized officer only under section 132(4) in the course of any search or seizure. Thus, the Income-tax Act, whenever it thought fit and necessary to confer such power to examine a person on oath, the same has been expressly provided whereas section 133A does not empower any officer to examine any person on oath. Therefore whatever statement is recorded under section 133A is not given any evidentiary value obviously for the reason that the officer is not authorized to administer oath and to take any sworn statement which alone has evidentiary value as contemplated under the law. Therefore the case of the assessee is distinguishable from the decisions relied on by the AO.
7.3 An assessee may tender an affidavit before the AO. It may point to some evidence. Such evidence can be acted upon by the AO. Should the AO regard the same as not sufficient proof of the contents thereof, then he should cross examine the deponent and, if dissatisfied, call upon the assessee to produce documentary evidence in support of the contents of the affidavit. If no such thing is done, the affidavit by itself should be regarded as sufficient proof. This was so held by the Hon’ble Supreme Court in Mehta Parikh & Co. vs. CIT (1956) 30 ITR 181 (SC). We find that in the present case the deponent has not been subjected to cross examination for bringing out the falsity of his statement. Therefore, we should not doubt the correctness of the statement made by the deponent in the affidavit in the instant case.
7.4 To sum up, a survey u/s 133A was carried out by the Department at the business premises of the assessee on 23/09/2005. In the statement recorded u/s 133A on the same day a disclosure of Rs.1,00,10,000/- was made by Mr. Kochhar and Rs. 85,50,000/- by Mrs. Kochhar. An affidavit was filed by Mr. Kochhar on 27/9/2005 and by Mrs. Kochhar on 26/09/2005 before the AO making a retraction of the declaration of the above amount. The assessees simultaneously filed letter on 27/09/2005 addressed to CCIT-I , CCIT-X and CIT-19 Mumbai, addressing his/her grievances. The CIT-19 sent a letter to the assessees on 28/09/2005 calling for a meeting on 04/10/2005. The cheques taken by the survey officials were returned back to the assessees. The ld. CIT(A) has observed that the entries in “Sunlife Account Book” “Sunny Deluxe Account Book” were fabricated by the survey team. The ld. Dr has not produced any material to refute the above findings of the ld. CIT(A). The survey proceedings in the present case fall in the realm of Illegality.
7.5 In view of the above facts, we uphold the deletion made by the ld. CIT(A) of the addition of Rs. 1,00,10,000/- made by the AO in the case of Mr Kochhar and Rs.85,50,000/- in the case of Mrs. Kochhar. Thereby, we dismiss the appeal filed by the Revenue against the order of the Ld. CIT(A) on the above two grounds.
The third ground raised by the Revenue in the case of Mr. Kochhar is that the ld. CIT(A) erred in accepting an argument of the assessee regarding business receipt of Rs. 36,000/- which was never made before the AO and which is in violation of Rule 46A of the Income Tax Rule.
8.1. We find that the ld. CIT(A) has come to a finding that in the present case the business receipt of Rs. 36,000/- was earned and the business is still going on as a proprietary concern. Therefore, he was convinced that there is substance in the argument of the assessee that there is no legal case for any disallowance. We agree with the above findings of the ld. CIT(A) as it is based on facts and no interference is called for.
In view of the above the appeals filed by the Revenue are dismissed.
Order pronounced in the open court on 23/09/2016.