Income Tax Appellate Tribunal - Jaipur
Assistant Commissioner Of Income Tax vs Sunil Kumar Jain on 25 January, 2007
Equivalent citations: (2007)110TTJ(JP)731
ORDER
I.C. Sudhir, J.M.
1. The Revenue has questioned first appellate orders in these appeals on the common grounds that the learned CIT(A) has erred in:
1. deleting the addition of Rs. 1,00,000 surrendered during the course of survey under Section 133A of the IT Act, 1961;
2. deleting the additions made under different heads, which were not mentioned in the reasons for reopening of the case without deciding on merits and wrongly placing reliance on the judgment of Hon'ble Punjab & Haryana High Court in the case of Vipan Khanna v. CIT , ignoring the decision of Hon'ble Supreme Court in the case of CIT v. Sun Engineering Works (P) Ltd. and in V. Jaganmohan Rao v. CIT .
2. Heard and considered the arguments advanced by the parties in view of the orders of the lower authorities and the decisions relied upon by them.
3. Ground No. 1:
3.1 The assessee had filed return of income for asst. yr. 1999-2000 on 11th Oct., 1999 declaring total income at Rs. 60,780. The return was processed under Section 143(1) on 25th Jan., 2000. For asst. yr. 2000-01, the return was filed on 17th Oct., 2000 declaring total income at Rs. 1,11,940. The return was processed under Section 143(1) on 19th Feb., 2001. Thereafter, a survey under Section 133A of the Act was conducted at the business premises of the assessee on 28th March, 2001, during which his statement was recorded. In this statement, the assessee had disclosed that he had paid Rs. 1,00,000 as "on money" for purchase of a plot in the name of his father, Shri Hari Ram Jain. Since the amount disclosed during the survey was not included by the assessee in his returns of income for the assessment years in question, the AO initiated proceedings under Section 147 of the Act after recording reasons in this regard. The learned CIT(A) has deleted the additions accepting the contention of the assessee that the statement of the assessee recorded at the time of survey on 28th March, 2001 was retracted by him vide affidavit dt. 28th Oct., 2001 filed before the AO (page No. 33 of the paper book), but the AO has still made the additions on the basis of said statement ignoring the material facts in this regard that Shri Hari Ram Jain, i.e., father of the assessee, was an existing income-tax assessee. The assessee had stated that the Department had commenced the survey proceedings at 9.00 A.M. on 28th March, 2001 and continued upto 6.00 A.M. of the next day, i.e. 29th March, 2001. During the survey proceedings, the assessee was subjected to a number of questions and was made to reply on different type of questions, which could be replied only under great duress and tension. In the process, the assessee lost his balance of mind. The statements, thus, recorded were under the duress and cannot be made out of free and fair will under the said circumstances. The learned CIT(A) observed further that the flow of statement shows that prior to question No. 28, wherein alleged disclosure of "on money" has been made, there is no reference to any alleged payment by the assessee in connection with the said property. There is no detail whatsoever available in the statement itself that how the alleged "on money" of Rs. 1,00,000 was paid by the assessee. The learned CIT(A) has supported his findings with the decisions in the cases of Pullangode Rubber Produce Co. Ltd. v. State of Kerala and Anr. , Lal Chand Agarwal v. Asstt. CIT (IT(SS)A No. 2259/Jp/1996), Mustaq Ahmed v. Asstt. CIT (IT(SS)A No. 19/Jp/1998) [reported at (2000) 66 TTJ (Jp) 305--Ed.] and the letter dt. 20th March, 2003 of CBDT issued from the File No. 280/2/2003-IT (Inv.) making clear that confessions taken during the course of survey/search, if not based upon credible evidence, are later retracted by the concerned assessee while filing of return of income. In these circumstances, the assessment in survey/search case shall be based upon the evidence/material gathered during the survey search proceedings. I find substance in the finding of the learned CIT(A) that when the statement by which surrender was made was retracted and the father of the assessee, Shri Hari Ram, Jain was an existing income-tax assessee, in whose name the amount of Rs. 1,00,000 stated to have been invested by the assessee, in such circumstances, keeping in view the retraction of statements it was the duty of the AO to examine Shri Hari Ram Jain to make the addition, if any, in the proper hands. In my view, the learned CIT(A) has, thus, rightly deleted the additions in question. The Ground No. 1 is, thus, rejected.
4. Ground No. 2:
4.1 As submitted earlier, the AO had initiated reopening proceedings recording the reasons that Rs. 1,00,000 paid as "on money" for purchase of the plot in the name of his father, Shri Hari Ram Jain, the income of the assessee in this regard has escaped assessment. The addition of Rs. 1,00,000 under Section 69 of the Act was accordingly made. The AO in this assessment also made addition on account of Section 68, trading addition and addition towards low household withdrawals. The learned CIT(A), referring decision of Jaipur Bench of the Tribunal in the case of Gyarsi Lal Gupta & Sons v. ITO (2005) 95 TTJ (Jp) 386, based on the decision of Hon'ble Punjab & Haryana High Court in the case of Vipan Khanna v. CIT , has deleted the addition with this observation that the action of the AO travelling beyond the reasons recorded for which reopening of the assessment under Section 147 cannot be held justified, especially when the AO had not brought on record any reason to show that the impugned addition was otherwise linked with the enquiry in regard to disclosure of alleged payment of "on money". I do not find reason to interfere with the first appellate order in this regard as though in view of the amendment in the provisions of Section 147 w.e.f. 1st April, 1989, the AO could not only assess or reassess the escaped income in respect of which proceedings under Section 147 have been initiated but also any other income chargeable to tax which may have escaped assessment and which comes to his knowledge subsequently in the course of such proceedings but at the same time as per the decision of Hon'ble Punjab & Haryana High Court in the case of Vipan Khanna v. CIT (supra), the AO cannot make addition on the heads unconnected with the issue for which reopening was initiated. It is not the case of the Department in the present matter under consideration that during the proceedings under Section 147, the additions in question were connected with the issue for which reopening was initiated or the AO had brought on record any reason to show that the impugned additions were otherwise linked with the enquiry in regard to disclosure of alleged payment of "on money". The learned CIT(A) has, thus, rightly deleted the additions in question made on account of trading addition, unestablished cash credit and low household withdrawals. The first appellate orders are, thus, upheld. It is worthwhile to mention over here that the Hon'ble Punjab & Haryana High Court, while deciding the case in Vipan Khanna v. CIT (supra), has referred the decision of Hon'ble Supreme Court in the case of CIT v. Sun Engineering Works (P) Ltd. and V. Jaganmohan Rao v. CLT (1970) 75 LTR 373 (SC). The Ground No. 2 is, thus, rejected.
5. In the result, appeals are dismissed.