Madhya Pradesh High Court
The Commissioner Of Income Tax, ... vs M/S Digambar Kumar Jain (Huf) Prop. M/S ... on 19 November, 2012
1
ITA No.198 of 2012
19/11/2012
Shri Sanjay Lal, Advocate for the appellant.
This appeal is directed against an order dated
13/06/2012 passed by Income Tax Appellate Tribunal,
Jabalpur Bench, Jabalpur, in ITA No. 114/Jab/2010
Assessment Year 2007-08, by which the Tribunal has
confirmed the order passed by the Commissioner of Income
Tax (Appeal) dated 08/07/2012. Both the authorities have
found that the Assessing Officer erred in making the addition
of Rs.40 lakhs as the additional income of the appellant
without any material, merely on the basis of statement
recorded during survey under Section 133A of the Income
Tax Act.
The learned counsel for the appellant submits that it was
burden on the assessee to prove that the statement recorded
by the Income Tax Officer, during the survey, was not correct.
Both the authorities have erred in treating the statement under
Section 133A of the Income Tax Act, as incorrect, in absence
of any corroboration by documentary evidence. It was
submitted that this appeal may be admitted on the substantial
questions of law as framed in the memo of appeal.
We have gone through the record and orders passed by
the CIT (A) and Income Tax Appellate Tribunal.
The facts of the case are that a survey under Section
133A of the Income Tax Act, was conducted in the premises of
the respondent-HUF on 20/09/2006. The respondent is a
manufacturer and trader of umbrellas. During survey, certain documents were found which were impounded. A statement of 2 Shri Digambar Kumar Jain, the Karta of the assessee was recorded in which he had admitted that there were certain discrepancies in the impounded documents and he had surrendered for taxation an amount of Rs.40 lakhs to cover possible anomaly. During the assessment proceedings, he had refuted the surrendered on the ground that there was no undisclosed income. The Assessing Officer on the basis of statement found that the assessee was liable for further addition of Rs.40 lakhs and assessed the respondent accordingly.
An appeal was preferred by the assessee against such an order before the Commissioner of Income Tax. In the appeal, it was stated that in absence of any material against assessee, addition could not have been made, merely on the basis of the statement recorded under Section 133A of the Income Tax Act. The aforesaid addition required corroboration by some cogent evidence.
The CIT (A) in the order has recorded facts, which reads thus:-
"It was vehemently contended by the counsel of the appellant that the action of the Assessing Officer in making addition of Rs.40,00,000/- is based purely on the statement recorded during the course of survey. It as contended that the outset it may be mentioned that the statement recorded during the course of survey has no binding force nor it can be considered for the purposes of assessment as held by the Kerala High Court in the case of Paul Mathews and Sans vs. CIT, 263 ITR page 101 (Kerala). The assessee had submitted a detailed reply in this regard which has been verbatim reproduced by 3 the Assessing Officer in the assessment order starting from page no.6 and completing on page no.11. The assessee had also filed a retraction of statement before the Commissioner of Income Tax. The Assessing Officer rejected the same that the retraction was submitted by the assessee after 2½ months of the survey. He however lost sight of the fact that all the books of accounts and documents were impounded by the survey authorities. The assessee was not provided the inspection and copies of those accounts and without looking into the accounts it was not possible for the assessee to ascertain the amount to surrender for the purpose of tax. However, when he examined those accounts he himself made surrender in the return of income submitted by him based on actuarial calculation by incorporating all the seized documents and calculated the income of Harish Umbrella at Rs.16,24,962/-. The Assessing Officer had also not doubted the surrender of the assessee in the return but he added a sum of Rs.40 lakhs based only on the statement recorded during the course of survey. While doing so he never even considered the surrender actually made by the assessee in the return of income which clear goes to show that the Assessing Officer had not properly appreciated the facts of the case and made the addition for addition sake. The detailed submission those were made before the Assessing Officer was again submitted and it was argued that the Assessing Officer had quoted several decisions but the sum and substance of the decisions were that addition cannot be made merely on alleged confession of the assessee unless it is corroborated by the other circumstantial evidence i.e. the books of accounts and other documents those may be found in possession f the assessee or collected by the Assessing Officer. In the instant case the 4 assessee had fully taken into consideration all the documents and papers those were found and on that basis has calculated its income and that had been offered for tax. Thereafter nothing remained to be explained as none is doubted by the Assessing Officer. It is thus manifest that income declared by the assessee fully covers all the accounts and documents found and seized by the survey party and there was absolutely no case for making any addition. The action of the Assessing Officer in making addition was based purely on statement recorded during the course of survey unless some other corroborative material was pointed out or brought on record by the Assessing Officer the action of AO is illegal. The Assessing Officer has not been able to substantiate the addition/surrender of Rs.40 lakhs by bringing on record such material or evidence. On the contrary the assessee has fully explained each and every paper and has made the correct surrender on actual working in the return of income. The law does not permit the addition as made by the Assessing Officer.
The CIT (A) on the basis of the aforesaid discussion held that the additional was not correct and it was not in accordance with law. Relying on the judgment of various High Courts, the aforesaid addition was deleted. Against the orders passed by the CIT(A), an appeal was filed before the Tribunal and Income Tax Appellate Tribunal, Jabalpur Bench, Jabalpur vide order dated 13/06/2012 has reconsidered the matter and found that CIT(A) was right in directing such deletion and dismissed the appeal. This order is under challenge.
We have perused the record and found that merely on the basis of statement under Section 133A of the Income Tax 5 Act, which was recorded during the survey, such addition could not have been made. To make such addition, some corroborating evidence against undisclosed income was required, which could not be found by the Assessing Officer. The Assessing Officer had made an addition merely on the basis of a statement recorded during survey under Section 133A of the Income Tax Act. The CIT (A) and the Tribunal had deleted it by holding that merely on the basis of such statement without corroboration, such addition could not be made.
Shri Lal learned counsel for the appellant also submitted that these authorities have not recorded any findings that the statement recorded under Section 133A of the Income Tax Act, was unbelievable, but considering the legal position as has been found by the CIT (A) and the Tribunal, the aforesaid contention has no merit. The view is supported by the judgments of various High Courts in (a) CIT Vs. Ms Dhingra Metal Works in ITA No.1111/2010 and (b) CIT vs. S. Khader Khan Son (2008) 300 ITR 157 (Mad), in which it has held thus :-
"In the instant case, there was a survey operation conducted under s. 133A in the assessee's premises and a statement was recorded from one of the partners. Assuming there were discrepancies and irregularities in the books of accounts maintained by the assessee, an offer of additional income for the respective assessment years was made by the partner of the firm. But, such statement, in view of the scope and ambit of the materials collected during the course of survey action under s. 133A shall not have any evidentiary value, as rightly held by the CIT(A) and the Tribunal, since such statement was not 6 attached to the provisions of s. 133A. It could not be said solely on the basis of the statement given by one of the partners of the assessee firm that the disclosed income was assessable as lawful income of the assessee. Since there was no material on record to prove the existence of such disclosed income or earning of such income in the hands of the assessee, it could not be said that the Revenue had lost lawful tax payable by the assessee. A power to examine a person on oath is specifically conferred on the authorities only under s.132(4) in the course of any search or seizure. Thus, the IT Act, whenever it thought fit and necessary to confer such power to examine a person on oath, has expressly provided for it, whereas s.133A does not empower any ITO to examine any person on oath. Thus, in contradistinction to the power under s.133A, s.132(4) 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 recorded under s. 133A is not given an evidentiary value. What is more relevant, in the instant case, is that the attention of the CIT(A) and the Tribunal was rightly invited to the circular of the CBDT dt. 10th March, 2003 with regard to the confession of additional income during the course of search and seizure and survey operations.- Pullanquote Rubber Produce Co. Ltd. vs. State of Kerala 1972 CTR (SC) 253 : (1973) 91 ITR 18 (SC), Paul Mathews & Sons vs. CIT (2003) 181 CTR (Ker) 207 : (2003) 263 ITR 101 (Ker) and CIT vs. G.K. Senniappan (2006) 203 CTR (Mad) 447 : (2006) 284 ITR 220 (Mad) relied on."
In view of the settled law of various High Courts as are referred in the order, we find that there was no error in the 7 order passed by the CIT (A) and the Tribunal. This appeal does not involve any substantial question of law for our consideration. This appeal is accordingly dismissed.
No order as to costs.
(Krishn Kumar Lahoti) (Smt.Vimla Jain)
JUDGE JUDGE
manju