CASE LAW DETAILS
Decided by: ITAT, DELHI BENCH `H’ : NEW DELHI, In The case of: Ravinder Kumar v. DCIT , Appeal No.:, ITA No. 661/Del/2009,Decided on: July 17. 2009
6. While concluding the statement, the assessee’s surrender is mentioned in the following words:-
In the above manner, total surrender in the hands of Gugnani, Trading Co. comes as under :-
i) Building A/c Rs.22,90,000. 00
ii) Stock A/c & Cash A/c Rs.15,34,000. 00
Total Rs.38,24,000. 00
The above surrender will be subject to non-initiation of penalty and interest and litigation of prosecution. Further stated that advance tax liability on the additional income, as above, will be paid in accordance with the provisions of Income-tax Act, 1961.”
7. The assessee subsequently realized mat surrender of Rs.22.90 lakhs under the head “building” had been thrust upon him without any valid basis insofar as building in question was owned by his brother Shri Devinder Kumar who was regularly assessed and he has fully explained the source of investment as per the statement recorded by the department. While riling the return of income on 31.10.2005, the assessee added the surrendered amount of stock and cash of Rs. 15.34 lakhs but did not add the so called investment in property amounting to Rs.22.90 lakhs. A note was recorded blow the sheet containing computation of income filed with the return of income which reads as under:-
During the course of survey on 05.11.2004, the assessee had agreed to the addition of Rs. 14.06 lakhs on a/c of difference in stock and Rs.0.49 lakhs as difference in cash in hand (total Rs. 15.34000) This addition has accordingly been made in the net profit subject to non-initiation of penalty and prosecution proceedings as stipulated in me statement recorded during survey.
2. As regards alleged unexplained investment of Rs.22.90 lakhs in building a/c, it is submitted mat the bldg. (No.2195/5, Rama Colony Rohtak) is owned by assessee*s brother Sh.Devinder Kumar and the investment on purchase of plot construction was made by him. The assessee has no connection with its ownership and he is only a tenant therein. The surrender of Rs.22.90 lakhs on mis a/c was made under a mistaken belief and in a totally disturbed mental state due to survey. This amount is hence not included in assessee’s income. This is submitted for your kind information. “
8. It is crystal clear from the statement recorded during the course of survey that building No.2195/5 was owned by the brother of the assessee Shri Devinder Kumar whose statement was also recorded with regard to the source of investment in the building. Shri Devinder Kumar was also filing his income tax return since last many years. Neither during the course of survey nor thereafter, even uptill framing of assessment u/s 143(3), the AO brought any material on record to substantiate feat any investment over and above what has been shown by Shri Devinder Kumar was made on the said property, nor he took pains to refer the valuation of the building to the Departmental Valuation Officer so as to find out correct state of affairs and to substantiate his stand that investment in the building was more than what has been recorded/disclosed by Shri Devinder Kumar who is the owner of the building. We also found that statement with regard to investment in building No.2195/5 was recorded on the next date of survey and the assessee was compelled to admit the investment in property of which the assessee was not the owner. Nothing was found during the course of survey to indicate to the assessee has either incurred himself any expenditure on the construction of building nor mat he has advanced the money to his brother for construction of the building, which was not found to be recorded in the books of account Even the CIT(A) while upholding the addition on account of surrender made on account of investment in building did not refer the matter to the DVO to find out if any excess investment was made in the building as compared to the investment shown by Shri Devinder Kumar, brother of the assessee who was separately assessed. Had the department any evidence to suggest that investment made in the building was more than what was stated by Shri Devinder Kumar, the department have all the rights to make the addition in the hands of Shri Devinder Kumar who was the real owner of the building and that all the facts relating thereto were disclosed not only with regard to the amount invested in building but also source thereof. Merely on the basis of statement having been recorded, no addition can be made unless the same can be corroborated by any material either found during the course of survey or subsequently brought on record by the department while framing the assessment Even appellate proceedings are extension of the assessment proceedings and the CIT(A) has got co-terminus powers to do what the AO has foiled to do. But, in the instant case, neither the AO nor CIT(A) has taken only pains to find out the correct state of affairs. The departmental valuation cell is meant’ for finding out the correct cost of construction, and which is fully supported by technical staff employed therein. When in the return itself the assessee has not offered the amount of surrender on account of investment in building, it is upon the AO to find out the actual cost of investment on building and to substantiate the surrender made which was alleged to be on account of undue influence and coercion. The fact that surrender on account ox investment in building w&> not recorded on the day of survey, but the assessee was subsequently called to the office on the next date and he was forced to surrender the amount itself indicate mat undue influence was exercised on the assessee to surrender the amount. Hon’ble Kerala High Court in the case of Paul Mathews & Sons – 263 ITR 101 held that statement of assessee recorded during the course of survey under course of survey “under provisions of Section 133A(3)(iii) can be said to be useful or relevant to the assessment proceedings only in the circumstances when there is a material on record to prove through the existence of any of the activities on the basis of which disclosure is stated to be made. It was categorically mentioned by the Hon’ble High Court that statement recorded u/s 133A cannot be given evidentiary value as such evidentiary value is not attached with the provisions of Section 133A of the Act the only basis for addition as per AO was the statement of the assessee without any corroborative material or documentary evidence on record. Hon’ble Madras High Court in the case of CIT Vs. S.Khandar Khan Chand 214 CTR 589, observed that where assessee has admitted suppressed income but there was no documentary evidence in possession of the department, no addition can be made on the basis of such statement The Hon’ble High Court reviewed all the available judgments on the point alongwith CBDT Instructions dated 10.3.2003, and went to the extent of holding that Section 133A does not empower any IT authorities to examine any person on path and hence, such statement has no evidentiary value and any admission made during such statement cannot by itself be made the basis for addition. After considering the proposition of law laid down in the cases of Pullangode Rubber Produce Co. Ltd. Vs. State of Kerala – 91ITR 18 (SC), Dr.S.C.Gupta Vs. CIT – 248 ITR 782 (All), Paul Mathews & Sons Vs. CIT – 263 ITR 101 (Ker) and CIT Vs. G. K. Senniappan – 284 ITR 220 (Mad), the Hon’ble High Court held that an admission is an extremely important piece of evidence but it cannot be said that it is conclusive and it is open to the 0person who made the admission to show that it is conclusive and it is open to the person who made the admission to show that it is incorrect and that the assessee should be given a proper opportunity to show that the books of account do not correctly disclose the correct state of affairs. It was further observed that in contradistinction to the power under Section 133 A, Section 132(4) of the IT Act enables the authorized officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the IT Act On the other hand, whatever statement is recorded under Section 133A of the IT Act it 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 lends evidentiary value under law.