Alankar Jewelers Vs DCIT (ITAT Indore)
The CBDT vide its circular F.No. 286/2/2003-IT (Inv.) dated 10th March 2003 has issued an advisory to its field officer regarding confession of additional income during the course of search and survey operations. Relevant portion of the above said circular is reproduced hereunder:
“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 0f the search and seizure and survey operations. Such confessions is not based u on credible evidence are later retracted by the concerned assessees while filing returns of income. In these circumstances. on confessions during the course of search and seizure and survey 0perations do not serve any useful purpose. It is. therefore. advised that there should be focus and concentration on collection 0f evidence 0f income which leads to in formation on what has not been disclosed or is not likely to be disclosed before the Income-tax Department Similarly. while recording statement during the Course of search and seizure and survey operations no attempt should be made to obtain confession as to the undisclosed income. An action on the contrary shall be viewed adversely.
Further. in respect of pending. assessment prot5eedings also. the Assessing Officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment ‘orders. “
From perusal of the judgment as well as the CBDT circular it opines that the statement given during the course of survey is not a statement on oath as given u/s 132(4) of the Act and therefore has no evidentiary value. Reliance should be placed upon the evidence/ materials gathered during the course of survey operations while framing the assessment orders. Therefore this finding of Ld. CIT(A) that the assessee was required to honour income surrendered during the course of survey at Rs.1,75,00,000/- and offer it to tax finds no merit.
FULL TEXT OF THE ORDER OF ITAT INDORE
The above captioned appeal filed at the instance of the assessee for Assessment Year 2016-17 is directed against the order of Ld. Commissioner of Income Tax (Appeals)-I (in short ‘Ld. CIT], Bhopal dated 17.10.2019 which is arising out of the order u/s 143(3) of the Income Tax Act 1961 (In short the ‘Act’) dated 26.12.2018 framed by DCIT/ACIT, Itarsi.
2. Assessee has raised following grounds of appeal:-
1. On the facts and circumstances of the case and applicable law, Ld. CIT(A)-I, Bhopal erred in dismissing the appeal and sustaining the assessment order of the Ld. A.O under this appeal which is contrary to the material on records and provisions of the Act, unjust, bad in law and without jurisdiction.
2. On the facts and circumstances of the case and applicable law, Ld. CIT(A)-I, Bhopal erred in sustaining the addition of Rs.1,59,19,451/- made by the Ld. AO on account of unexplained stock of gold and silver jewellery disregarding the facts of the case, settled legal position and explanation submitted by the appellant.
3. On the facts and circumstances of the case and applicable law, Ld. CIT(A)-I, Bhopal erred in dismissing the appeal and sustaining the addition of Rs.3,75,510/- made by the Ld. AO on account of undisclosed cash found during survey disregarding the facts of the case, settled legal position and explanation submitted by the appellant.
4. On the facts and circumstances of the case and applicable law, Ld. CIT(A)-I, Bhopal erred in dismissing the appeal and sustaining the addition of Rs.1,00,145/- made by the Ld. AO on account of unexplained expenditure disregarding the facts of the case, settled legal position and explanation submitted by the appellant.
5. On the facts and in the circumstances of the case, the Ld. CIT(Appeals)-I, Bhopal erred in sustaining the levy of interest u/s 234A, 234B & 234C of the Act, whereas no such interest is chargeable
6. On the facts and in the circumstances of the case, the Ld. CIT(Appeals)-I, Bhopal erred in sustaining initiation of penalty proceedings u/s 271(1)(c) of the Act, whereas no occasion to initiate penalty.
7. The appellant, carves leave to add, amend, alter or otherwise raise any other ground of appeal.
3. Brief facts of the case as culled out from the records are that the assessee is a partnership firm engaged in the business of trading of gold, silver jewellery and pawning. Survey U/s 133A of the Act was conducted at the business premises of the assessee firm on 16.12.2015. Certain discrepancies were noticed by the survey officials which could not be instantly clarified by the partner of the firm. Statement was recorded and surrender of Rs.1,75,00,000/- was made on account of following:-
