Income Tax Appellate Tribunal - Jodhpur
Income Tax Officer vs Vardhman Industries on 14 March, 2005
Equivalent citations: (2006)99TTJ(JODH)509
ORDER
Hari Om Maratha, J.M.
1. All these appeals by the Department for asst. yrs. 1995-96 to 1997-98 and cross-objections by the assessee for asst. yrs. 1996-97 and 1997-98 involve almost identical facts, so these are being disposed of by this common order for the sake of convenience and brevity.
2. For the sake of convenience, the facts for asst. yr. 1996-97 in ITA No. 296/Ju/2000 are taken up.
3. The only issue raised in this appeal is that the assessee, who is an Adarthia, had filed returns and has declared loss, whereas the AO made an addition of Rs. 3,50,000 on account of agriculturists. The assessee filed returns declaring loss of Rs. 1,48,572 on 31st Oct., 1996 within due time. This addition has been made by treating the credit balance outstanding on the last date of accounting year in the account of agriculturists as ingenuine. The AO however, did accept the books of account of assessee as correct and fully verifiable which is quite evident from the observations in the assessment order. It is because of the fact that no major disallowance out of trading account or from various expenses account were made. The AO also accepted the purchases made from agriculturists as correct. But has made the additions on suspicions and that the credits in their names are ingenuine. The further relevant brief facts are that the case of the assessee for asst. yr. 1995-96 was being scrutinized and after several adjournments, the case was fixed on 23rd Sept., 1996 and on that date, the assessee surrendered the loss claimed and all the books were impounded. The case was adjourned to 24th Oct., 1996 and finally on 27th Nov., 1996 the case was adjourned sine die. On 19th Feb., 1997 survey under Section 133A was conducted wherein books of account were found written upto the date and as such, no discrepancy or incriminating documents were found or noticed. One of the partners, namely, Shri Pradeep Kumar wrote a letter surrendering Rs. 9 lakhs for all the three years, namely, 1995-96, 1996-97 and 1997-98, a copy of which is placed at p. 88 of the paper book. This letter of surrender is assailed by the assessee by stating that it was got under duress and pressure by the authorized person at that time. This surrender related to all the three years, i.e., Rs. 2.5 lakhs for financial year 1994-95, Rs. 3.5 lakhs for financial year 1995-96, Rs. 3 lakhs for financial year 1996-97. The case of the assessee was that since the assessee is an Adarthia and the credits in the name of these agriculturists were not at all a cash credit but a credit due to agricultural produce which were given for selling to the assessee and the money related to crops sold by the assessee. The learned CIT(A) accepted the claim of the assessee and deleted the additions for all the three years. Now the Department is aggrieved and has come in appeal before me.
4. I have heard the rival submissions and perused the relevant material on record.
5. I have seen the letter dt. 19th Feb., 1997 which is the bone of contention for all the three years, which is placed at p. 88 of the paper book filed by the assessee and on which the learned Departmental Representative has also relied. From the wordings used in the letter in the first sentence, it is written that ^^gesa crk;k x;k dh tks QeZ dh 'khV 31st March, 1995 and 31st March, 1996 esa tehankjksa dk iSlk tek fn[kk;k x;k gS] mlesa ls dqN blesa dgh ugh gS] gekjk dguk gS ;g blesa lgh gS A fQj Hkh dkuquh dk;Zokgh ls cpkus ds fy;sa vkSj ekufld 'kkfUr ds fy;s ge fuEufyf[kr jde dks LosPNk ls vk;dj nsus ds fy;s lefiZr djrs gSa A I am not ready to accept the submissions of the learned Departmental Representative that when once the assessee has surrendered certain incomes, etc. he cannot retract from the same. It is always open to the assessee to retract from any surrender which was made under duress or pressure and if he could prove that the retraction is in order because whatever was surrendered, is not, or was not, a fact. In case the assessee is able to substantiate the retracted statement, it can be legally accepted without any illegality attached thereto. The principle of estoppel does not arise in such cases. The assessee/partner was asked to surrender loss claimed in the return for asst. yr. 1995-96 and the books of account were also impounded before survey. During the course of survey when nothing specific was found against the assessee, the credit entry in his balance sheet was suggested to be bogus and was advised to make surrender and accordingly, the partner, Shri Pradeep Kumar made -surrender for all the three years in question. After accepting such suggestion in such situation it cannot be stated to be voluntary surrender as alleged by the AO. This surrender stood, withdrawn immediately thereafter and before completion of the assessment. The AO has not brought any material or independent evidence on record to make additions is respect of credits accounted for by the assessee in his books of account. But he simply relied on the surrender. So, in my considered opinion, the findings of the learned CIT(A) are perfectly alright and deserve no interference for all the three years and hence all the three appeals of the Department are dismissed.
6. In the cross-objection, the only ground taken by the learned Authorised Representative, Shri Suresh Ojha for asst. yrs. 1996-97 and 1997-98 are that the learned AO has relied on the statements taken by the Inspector and also the statements recorded by himself. Without going into much detail, both these issues stand covered by the order of this Bench. This Bench has been consistently holding that the statements recorded by the Inspector of the Department are not valid statements as he is not authorized to record such statements and the statements recorded by the ITO without reading over, and explaining to the maker of the statements before his signature are invalid as has been held by the Hon'ble jurisdictional High Court in the case of CTO v. Kewai Ram Sumnomal Cavanduspur 92 STC 29, copy of which is filed on record. So, to that extent, the cross-objections are allowed.
7. In the result, the appeals of the Department are dismissed whereas the cross-objections are allowed.