Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH “C”, NEW DELHI
Before: SHRI H.S. SIDHU & SHRI PRASHANT MAHARISHI
Date of Hearing : Date of Hearing : 07-03-201 Date of Hearing : Date of Hearing : 201 2016 201 Date of Order : Date of Order : 08-03-201 Date of Order : Date of Order : 201 2016 201 ORDER ORDER ORDER ORDER
PER H.S. SIDHU : JM PER H.S. SIDHU : JM PER H.S. SIDHU : JM PER H.S. SIDHU : JM
This appeal by the Assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals)-II, New Delhi dated 8.10.2014 pertaining to assessment year 2010-11.
Assessee has raised 06 grounds, but at the time of hearing, Ld. Counsel of the Assessee only argued the Ground No. 2 which is reproduced as under:-
“2. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of the AO in making addition of Rs. 70,00,000/- by treating it as undisclosed income of the assessee and that too without providing any adverse material on record and without considering the facts and circumstance of the case and without cross examination and in violation of principles of natural justice.”
The brief facts of the case are that the assessee filed its return of income of Rs. 45,465/- on 30.3.2011. A search and seizure operation was carried in Mahesh Mehta Group of Cases on 30.6.2009 and the assessee company was covered u/s. 133A of the I.T. Act on 30.6.2009. During the course of survey u/s. 133A of the I.T. Act, Statement of Sh. Ajay Singhal, S/o Sh. Roshan Lal, Director of the assessee company was recorded on 30.6.2009 which the Assessing Officer has reproduced in this assessment order at pages 1 & 2 vide para no. 3. The AO has specifically pointed out the Answer of Question No. 22 in which Sh. Ajay Singhal submitted that my Group has earned undisclosed income of Rs. 70 lacs during the Financial Year 2009-10 from various sources which he wanted to surrender in the hands of his Group Companies, himself and his immediate family members over and above the income from all the sources accounted for till date and ready to pay taxes on this undisclosed income of Rs. 70 lacs subject to condition that no penalty proceedings will be initiated. After considering the reply filed by the Assessee as well as other documentary evidence in response to the notices issued by the AO, the AO made the addition of Rs. 70 lacs to the income of the assessee company on the basis of the Statement recorded u/s. 133A of the Act and completed the assessment on 18.3.2013 u/s. 143(3) of the I.T. Act.
Aggrieved with the action of the Assessing Officer, Assessee filed the Appeal before the Ld. CIT(A), who vide his impugned order dated 08.10.2014 dismissed the Appeal of the Assessee by upholding the assessment order passed by the AO.
Against the Ld. CIT(A)’s order dated 8.10.2014, now the assessee is in Appeal before the Tribunal.
At the time of hearing, Dr. Rakesh Gupta, Ld. Counsel of the Assessee stated that although the Assessee has raised 06 grounds in the Appeal, but he is only pressing the ground no. 2, as aforesaid. At the threshold, he drew our attention towards the Paper Book filed by the Assessee containing pages 1 to 101 in which he has attached the Written Submissions filed by the Assessee before the Ld. CIT(A) alongwith the Statement of Sh. Ajay Singhal recorded u/s. 133A of the Act by the Department and few case laws supported the averments made by the Assessee in the Written Submissions and requested that in view of the Written Submissions filed by the Assessee before the Ld. CIT(A supported by the case laws, the addition of Rs. 70 lacs made by the AO and confirmed by the Ld. CIT(A) is contrary to law and facts and deserve to be cancelled. He further stated that the addition in dispute has been made only on the basis of the Statement of Sh. Ajay Singhal recorded u/s. 133A of the Act which cannot be stained because such statement does not have any evidentiary value and the addition made on such statement recorded u/s. 133A of the Act is not sustainable, in view of the following case laws, which were mentioned in the Assessee’s Paper Book.
- CIT vs. S. Khader Khan Son 214 CTR 589 (Mad.). - Unitex Products Ltd. vs. ITO (2008) 22 SOT (Mumbai) - CIT vs. P. Balasubramanian 354 ITR 116 (Mad.) - ITO vs. Ram Prakash dated 18.7.2014. - Mahesh Ohri vs. ACIT 23 ITR (T) 522 - Abhi Developers vs. ITO (2007) 12 SOT 444 (Ahd.) - Ravinder Kumar vs. DCIT (2009) 33 SOT 251 (Del.) - DCIT vs. Premsons 37 DTR 150 (Mumbai ‘B’) - CIT vs. Digambar Kumar Jina (HUF) 84 DTR 365 (MP) - ACIT vs. Safe Enterprises (2011) 128 ITD 459 (Mum)
6.1 He also draw our attention towards the CBDT’s Letter issued vide F.No. 286/2/2003-IT (Inv) dated 10.3.2003 wherein it is mentioned that while recording statement during the course of search it seizures and survey operations no attempt should be made to obtain confession as to the undisclosed income. Ld. Counsel of the Assessee further stated that moreover the alleged statement of Mr. Ajay Singhal cannot be used to make impugned addition in the hands of the assessee company under any circumstances which is clear from the plain reading of the answer to Question No. 22 in which he has not surrendered the impugned amount in the hands of the assessee company. He stated that the said statement is quite vague. Furthermore, he stated that Sh. Ajay Singhal is not the sole authority to state anything on behalf of the assessee company. He holds 3.99% shareholding. In view of the above, he requested that the addition made on the basis of statement recorded u/s. 133A is not justified at all and hence, needs to be deleted.
On the contrary, Sh. T. Vasanthan, Ld. Departmental Representative has relied upon the order of the authorities below and stated that the same may be upheld and the appeal of the Assessee may be dismissed accordingly.
We have heard both the parties and perused the records, especially the orders of the revenue authorities, statement recorded u/s. 133A of the Act and the case laws cited by the Ld. Counsel of the assessee, as aforesaid as well as the CBDT’s Circular dated 10.3.2003. We find that in the present case an addition of Rs. 70 lacs was made by the AO on the basis of statement of Mr. Ajay Singhal at the time of survey recorded u/s. 133A of the I.T. Act. We find considerable cogency in the Ld. Counsel of the assessee’s submissions that addition cannot be made on the basis of the statement recorded during the survey under section 133A of the Act, in view of the various judicial decisions wherein, it has been held that such statement does not have any evidentiary value, especially the decision of the Hon’ble Madras High Court in the case CIT vs. S. Khakder Khan son reported in {2008) 300 ITR 157 (Madras) wherein, it has been held that “Addition on the basis of statement recorded during survey under section 133A-Sect. 133A does not empower any IT Authority to examine any person on oath, hence, any such statement has no evidentiary value and any admission made during such statement cannot, by itself, be made the basis for addition” and the decision of the Hon’ble High Court of Jharkhand delivered in the case of CIT, Ranchi vs. Ravindra Kumar Jain reported in (2009)
33 SOT 251 (Delhi) wherein, it has been held that “addition made by the lower authorities merely on the basis of statement recorded during survey and thereafter, without bringing any corroborative material on record is devoid any merits.” We also find force in the assessee’s counsel contention that in view of the CBDT’s Letter issued vide F.No. 286/2/2003-IT (Inv.) dated 10th March, 2003 the addition made by the AO and confirmed by the Ld. CIT(A) is not sustainable in the eyes of law. For the sake of clarity we are reproducing the contents of the CBDT’s letter dated 10.3.2003 as under:-
“F.No. 286/2/2003-IT (Inv)
Government of India, Ministry of Finance & Company Affairs, Department of Revenue Central Board of Direct Taxes, Room No. 254, North Block, New Delhi, the 10th march, 2003
To All Chief Commissioners of Income tax (Cadre Contra) & All Directors General of Income Tax Inv.
Sir,
Sub:- Confession of additional Income during the course of search & seizure and survey operation – regarding
Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search & seizure and survey 6 operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, on confessions during the course of search & seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on' collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Departments. Similarly, while recording statement during the course of search it seizures and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely.
Further, in respect of pending assessment proceedings also, assessing officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders
Yours faithfully,