Asstt. Commissioner of Income Tax-III, Kanpur v. Smt Laxmi Agarwal, Kanpur

ITA 564/LKW/2013 | 2006-2007
Pronouncement Date: 21-11-2014 | Result: Partly Allowed

Appeal Details

RSA Number 56423714 RSA 2013
Assessee PAN AFKPA2144N
Bench Lucknow
Appeal Number ITA 564/LKW/2013
Duration Of Justice 1 year(s) 4 month(s) 4 day(s)
Appellant Asstt. Commissioner of Income Tax-III, Kanpur
Respondent Smt Laxmi Agarwal, Kanpur
Appeal Type Income Tax Appeal
Pronouncement Date 21-11-2014
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 21-11-2014
Date Of Final Hearing 30-09-2014
Next Hearing Date 30-09-2014
Assessment Year 2006-2007
Appeal Filed On 17-07-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI. A. K. GARODIA ACCOUNTANT MEMBER ITA NO.564/LKW/2013 ASSESSMENT YEAR:2006-07 ACIT-III KANPUR V. SMT. LAXMI AGARWAL PROP. M/S CHANDRA KISHORE ASHOK KUMAR 48/226 GENERAL GANJ KANPUR PAN/PAN:AFKPA2144N (APPELLANT) (RESPONDENT) C.O. NO.38/LKW/2013 [ARISING OUT OF ITA NO.564/LKW/2013] ASSESSMENT YEAR:2006-07 SMT. LAXMI AGARWAL PROP. M/S CHANDRA KISHORE ASHOK KUMAR 48/226 GENERAL GANJ KANPUR V. ACIT-III KANPUR PAN/PAN:AFKPA2144N (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY: SHRI. ALOK MITRA D.R. ASSESSEE BY: SHRI. H. P. SINHA ITP DATE OF HEARING: 30 09 2014 DATE OF PRONOUNCEMENT: 21 11 2014 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) MAINLY ON TWO GROUNDS ONE IS WITH REGARD TO THE DELETION OF ADDITION OF RS.35 LAKHS ON ACCOUNT OF UNDISCLOSED STOCK AND THE OTHER IS WITH REGARD TO THE DELETION OF ADDITION OF RS.20 LAKHS ON ACCOUNT OF G.P. RATE. :- 2 -: 2. IN SUPPORT OF THE ORDER OF THE LD. CIT(A) THE ASSESSEE HAS FILED CROSS OBJECTION BY RAISING VARIOUS GROUNDS. SINCE THE APPEAL AND CROSS OBJECTION WERE HEARD TOGETHER THESE ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE FACTS IN BRIEF BORNE OUT FROM THE ORDERS OF THE LOWER AUTHORITIES ARE THAT A SURVEY OPERATION WAS CONDUCTED IN THE ASSESSEES PREMISES ON 10.3.2006. THE ASSESSEE ENGAGED IN THE BUSINESS OF WHOLE SALE CLOTH TRADING UNDER THE NAME AND STYLE OF PARTNERSHIP CONCERN M/S CHANDRA KISHORE ASHOK KUMAR & SONS AT THE PREMISES 48/226 GENERAL GANJ KANPUR HAS MADE A VOLUNTARY SURRENDER OF UNDISCLOSED STOCK OF RS.35 LAKHS IN THE CASE OF M/S CHANDRA KISHORE ASHOK KUMAR & SONS AND RS.17 LAKHS ON ACCOUNT OF UNDISCLOSED STOCK IN THE CASE OF M/S DEVI & COMPANY WHICH WAS ALSO RUNNING ITS BUSINESS AT THE SAME PREMISES HAVING ADMITTED THAT VALUATION OF STOCK WAS NOT POSSIBLE AS IT WAS SPREAD OVER IN FIVE FLOORS OF THE PROPERTY AND GODOWNS. AFTER MAKING SURRENDER STATEMENT THE ASSESSEE HAS ISSUED A CHEQUE OF RS.10 71 0000/- AS INCOME TAX ON THE SAME DAY IN THE CASE OF M/S CHANDRA KISHORE ASHOK KUMAR & SONS AND A CHEQUE OF RS.5 20 000/- IN THE CASE OF M/S DEVI & COMPANY. THEREAFTER THE ASSESSEE HAS FILED A WRIT PETITION BEFORE THE HON'BLE HIGH COURT OF ALLAHABAD QUESTIONING THE VALIDITY OF THE SURVEY AND THE FACTUM OF VOLUNTARY SURRENDER OF THE AFORESAID AMOUNT. THE HON'BLE HIGH COURT OF ALLAHABAD DISPOSED THE WRIT PETITION VIDE ITS ORDER DATED 7.1.2008 WITH THE OBSERVATION THAT THE CONTENTION OF THE PETITIONER IN THE WRIT PETITION THAT THE SURRENDER WAS NOT VOLUNTARY BUT WAS FORCED BECOMES A HIGHLY DISPUTED QUESTION OF FACT; WHICH CANNOT BE EXAMINED IN WRIT JURISDICTION. THE HON'BLE HIGH COURT ACCORDINGLY HELD THAT SINCE VOLUNTARINESS OF WHICH CANNOT BE SEEN IN WRIT JURISDICTION BEING A PURE QUESTION OF FACT WHICH IS DISPUTED CAN BE EXAMINED IN THE PROCEEDINGS UNDER THE INCOME-TAX ACT. CONSEQUENTLY THE ASSESSMENT WAS FRAMED VIDE ORDER DATED 30.12.2008 AND HAVING RELIED :- 3 -: UPON THE STATEMENT RELATING TO THE VOLUNTARY SURRENDER OF RS.35 LAKHS THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS.35 LAKHS ON ACCOUNT OF UNDISCLOSED STOCK AS THIS SURRENDERED AMOUNT WAS NOT SHOWN IN THE RETURN OF INCOME FILED BY THE ASSESSEE. 4. BESIDES THE ASSESSING OFFICER HAS ALSO EXAMINED THE GROSS PROFIT RATE DECLARED BY THE ASSESSEE AND THE OTHER FIRM M/S DEVI & COMPANY OF WHICH PROPRIETOR IS M/S ASHOK KUMAR AGARWAL HUF IN WHICH SON OF THE ASSESSEE SHRI. GAURAV AGARWAL IS KARTA HAVING SHOP IN THE SAME PREMISES. HAVING NOTED THE DIFFERENCE IN RATES IN BOTH THE CONCERNS DEALING IN SAME TYPE OF BUSINESS OF SALE OF SAREES AND OTHER CLOTH MATERIAL THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS.20 LAKHS ON ACCOUNT OF LOW G.P. SHOWN BY THE ASSESSEE. 5. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). WITH REGARD TO THE SURRENDER OF RS.35 LAKHS IN THE HANDS OF THE ASSESSEES PROPRIETORSHIP CONCERN M/S CHANDRA KISHORE ASHOK KUMAR & SONS IT WAS CONTENDED BEFORE THE LD. CIT(A) THAT THE STATEMENT OF THE ASSESSEE LADY WAS RECORDED AT THE MIDNIGHT ON 11.3.2006 AND SHE WAS FORCED TO SURRENDER THE AFORESAID AMOUNT OF RS.35 LAKHS IN THE HANDS OF THE ASSESSEE-FIRM. IT WAS FURTHER CONTENDED THAT AT THE TIME OF SURVEY HER SON SHRI. GAURAV AGARWAL LOOKING AFTER THE BUSINESS WAS AWAY FROM KANPUR AND WAS IN SURAT AND THE LADY THE ASSESSEE WHO WAS NOT HAVING THE DETAILED INFORMATION WITH REGARD TO THE STOCK WAS FORCED BY THE SURVEY TEAM TO MAKE VOLUNTARY SURRENDER. RELIANCE WAS ALSO PLACED ON VARIOUS JUDICIAL PRONOUNCEMENTS AND THE LD. CIT(A) BEING CONVINCED WITH IT HAS DELETED THE ADDITIONS. 6. NOW THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMISSION THAT DURING THE COURSE OF SURVEY STATEMENT OF THE MANAGER SHRI. SURESH CHANDRA AGARWAL WAS DULY RECORDED ON OATH AND QUERIES WERE ALSO RAISED FROM HIM WITH REGARD TO THE STOCK AVAILABLE AND IN RESPONSE :- 4 -: THERETO IT WAS STATED THAT THE STOCKS WERE SPREAD OVER AT DIFFERENT FLOORS OF THE BUILDING AND THE STORE SITUATED AT 55/115 GENERAL GANJ KANPUR. THE STATEMENT OF THE ASSESSEE PROPRIETOR OF M/S CHANDRA KISHORE ASHOK KUMAR & SONS WAS ALSO RECORDED ON OATH AND IN HER STATEMENT SHE CATEGORICALLY ADMITTED THAT KEEPING IN VIEW THE NATURE OF BUSINESS IT IS NOT POSSIBLE TO RECONCILE THE STOCK AVAILABLE WITH THE BOOKS OF ACCOUNT. IT WAS ALSO DEPOSED THAT THE SALE/PURCHASE VOUCHERS ARE ALSO NOT AVAILABLE AS THEY WERE LOCATED IN THE ALMIRAH AND KEY OF THE SAME WAS WITH HER SON SHRI. GAURAV AGARWAL. SHE FURTHER DEPOSED THAT IN THESE CIRCUMSTANCES THE VALUATION OF THE ENTIRE STOCK IS NOT POSSIBLE AS IT WAS SPREAD OVER IN FIVE STORIES AND GODOWNS. IT WAS ALSO DEPOSED THAT ON ACCOUNT OF HOLI FESTIVAL THE MAXIMUM STAFF WAS ON LEAVE THEREFORE VALUATION OF STOCK IS NOT POSSIBLE AND ON THE BASIS OF THE INFORMATION WITH REGARD TO BOTH THE FIRMS SHE MADE A VOLUNTARY SURRENDER OF RS.52 LAKHS IN BOTH THE CONCERNS I.E. M/S CHANDRA KISHORE ASHOK KUMAR & SONS AND M/S DEVI & COMPANY. 7. IN THE CASE OF M/S CHANDRA KISHORE ASHOK KUMAR & SONS RS.35 LAKHS WAS SURRENDERED AND SHE HAS ALSO ISSUED A CHEQUE FOR RS.10 71 000/- VIDE CHEQUE NO.075272 DATED 10.3.2006. BESIDES A CHEQUE OF RS.5 20 200/- WAS ALSO ISSUED IN THE CASE OF M/S DEVI & COMPANY IN WHICH SURRENDER OF RS.17 LAKHS WAS MADE. THE LD. D.R. HAS FURTHER CONTENDED THAT HAD IT BEEN A CASE OF FORCED SURRENDER THE ASSESSEE COULD NOT HAVE MADE PAYMENT OF THE DUE TAX ON THE SURRENDERED AMOUNT BY ISSUING CHEQUE OF THE AFORESAID AMOUNT. NOT ONLY THAT SHE HAS ALLOWED THE CHEQUE TO BE ENCHASED FROM HER BANK ACCOUNT. THE LD. D.R. HAS INVITED OUR ATTENTION TO THE STATEMENT OF SMT. LAXMI AGARWAL APPEARING AT PAGES 149 TO 152 OF THE COMPILATION OF THE ASSESSEE. THE STATEMENT OF SHRI. SURESH CHANDRA AGARWAL IS ALSO AVAILABLE AT PAGES 155 AND 156 OF THE COMPILATION OF THE ASSESSEE. THE LD. D.R. HAS FURTHER INVITED OUR ATTENTION TO THE STATEMENT OF SHRI. GAURAV AGARWAL RECORDED ON 14.3.2006 WITH THE SUBMISSION THAT UPTO 14.3.2006 :- 5 -: NEITHER SHRI. GAURAV AGARWAL NOR HIS MOTHER THE ASSESSEE HAS RAISED ANY VOICE WITH REGARD TO THE ALLEGED FORCED SURRENDER OF THE AFORESAID AMOUNT. THEY SIMPLY APPEARED BEFORE THE ASSESSING OFFICER AND MADE STATEMENT WITH REGARD TO THE QUERY RAISED BY THE ASSESSING OFFICER. THE LD. D.R. HAS FURTHER INVITED OUR ATTENTION TO THE LETTERS WRITTEN BY THE ASSESSEE TO THE ASSESSING OFFICER ON 13.3.2006. IN THAT LETTER THOUGH SHE HAS MADE A REFERENCE OF THE SURVEY CONDUCTED ON 10 TH AND 11 TH OF MARCH 2006 AND CHALLENGED THE JURISDICTION OF THE ASSESSING OFFICER BUT NO VOICE WAS RAISED WITH REGARD TO FORCEDSURRENDER. IN THAT LETTER IT WAS SIMPLY STATED THAT THE ASSESSEE WAS FORCED TO SIGN CERTAIN PAPERS WHICH WERE PREPARED BY THE SURVEY PARTY. IN THE LETTER SHE HAS NOT RAISED ANY ISSUE WITH REGARD TO THE VOLUNTARY SURRENDER OF RS.35 LAKHS ON ACCOUNT OF UNDISCLOSED STOCK AND PAYMENT OF TAX THEREON. THEREAFTER THE STORY OF FORCED SURRENDER WAS RAISED FIRST TIME THROUGH WRIT PETITION FILED BEFORE THE HON'BLE ALLAHABAD HIGH COURT IN APRIL 2006 WHEREIN IT WAS ALLEGED THAT THE ASSESSEE WAS FORCED TO MAKE SURRENDER OF THE STOCK AMOUNTING TO RS.35 LAKHS IN THE CASE OF M/S CHANDRA KISHORE ASHOK KUMAR & SONS AND RS.17 LAKHS IN THE CASE OF M/S DEVI & COMPANY. THIS WRIT PETITION WAS DISPOSED OF BY THE HON'BLE HIGH COURT OF ALLAHABAD WITH THE OBSERVATION THAT THE ISSUE OF VOLUNTARY SURRENDER CAN BE EXAMINED BY THE ASSESSING AUTHORITIES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS NOT PRODUCED EVEN A SINGLE DOCUMENTARY EVIDENCE TO JUSTIFY THAT THE ASSESSEE WAS FORCED TO MAKE SURRENDER. THE LD. D.R. HAS FURTHER CONTENDED THAT IF THE SURRENDER WAS OBTAINED BY USING FORCE BY THE SURVEY TEAM THE ASSESSEE COULD HAVE LODGED COMPLAINT EITHER WITH THE POLICE AUTHORITIES OR HIGHER AUTHORITIES OF THE INCOME-TAX DEPARTMENT. MOREOVER IF SURRENDER WAS OBTAINED BY USING FORCE THE CHEQUE ISSUED BY THE ASSESSEE TOWARDS TAX LIABILITY COULD HAVE BEEN STOPPED ON THE SUBSEQUENT DATES WHEN THE SURVEY TEAM HAS LEFT THE PREMISES AND THERE WAS NO PRESSURE OR COERCION UPON THE ASSESSEE. THE LD. D.R. HAS FURTHER CONTENDED THAT IN THE REMAND REPORT THE ASSESSING :- 6 -: OFFICER HAD RAISED ALL THESE POINTS BEFORE THE LD. CIT(A) BUT THE LD. CIT(A) HAS DELETED THE ADDITION HAVING OBSERVED THAT THE ASSESSEE WAS NOT EXAMINED BY THE ASSESSING OFFICER. THE LD. D.R. HAS ALSO MADE A SUBMISSION WITH REGARD TO THE JUDGMENTS REFERRED TO BY THE LD. CIT(A) WHILE DELETING THE ADDITIONS THAT NO DOUBT UNDER SECTION 133A OF THE ACT THE ASSESSING OFFICER OR THE SURVEY TEAM CANNOT RECORD ANY STATEMENT ON OATH BUT WHATEVER STATEMENT IS RECORDED IT HAS SOME EVIDENTIARY VALUE THOUGH IT MAY NOT BE A CONCLUSIVE EVIDENCE FOR MAKING AN ADDITION. ONCE THE STATEMENT IS RECORDED ADMITTING THE UNEXPLAINED STOCK IT IS FOR THE ASSESSEE TO RECONCILE THE DISCREPANCIES IN THE STOCK. BUT IN THE INSTANT CASE THE ASSESSEE DID NOT ALLOW THE SURVEY TEAM TO VALUE THE STOCK AVAILABLE AT THE BUSINESS PREMISES BY SAYING THAT THE STOCK IS SPREAD OVER IN FIVE FLOORS OF THE PROPERTY AND THE GODOWNS AT OTHER PLACES AND ALSO IN THE ABSENCE OF SUFFICIENT STAFF THE VALUATION OF STOCK IS NOT POSSIBLE. WITHOUT CO-OPERATION OF THE ASSESSEE THE SURVEY TEAM CANNOT VALUE THE STOCK AND MOREOVER WHEN THE ASSESSEE HERSELF HAS COME FORWARD TO MAKE SURRENDER OF RS.52 LAKHS HAVING ADMITTED THAT STOCK CANNOT BE RECONCILED WITH THE BOOKS OF ACCOUNT AND ON ACCOUNT OF UNDISCLOSED STOCK. UNDER THESE CIRCUMSTANCES WHERE THE SURVEY TEAM IS RESTRAINED FROM VALUING THE STOCK AND THE ASSESSEE HAS SURRENDERED A PARTICULAR AMOUNT AND PAID TAX THEREON THE ADDITION ON THE BASIS OF SURRENDER STATEMENT IS SUSTAINABLE IN THE EYES OF LAW. 8. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND HAS SUBMITTED THAT DURING THE COURSE OF SURVEY THE ASSESSEE BEING A LADY WAS NOT AVAILABLE AND IT WAS TOLD TO THE SURVEY TEAM THAT SHRI. GAURAV AGARWAL WHO WAS THE SON OF THE ASSESSEE AND LOOKING AFTER THE BUSINESS OF THE ASSESSEE WAS NOT IN TOWN AS HE HAS GONE TO SURAT. THE SURVEY TEAM INSTEAD OF VALUING THE STOCK HAS FORCED THE ASSESSEE TO MAKE VOLUNTARY SURRENDER. ACCORDINGLY THE SURRENDER WAS MADE. THEREFORE WHEN THE SURRENDER WAS :- 7 -: OBTAINED BY FORCE OR COERCION THE ADDITION CANNOT BE MADE ON THE SOLE STATEMENT RELATING TO SURRENDER OF A PARTICULAR AMOUNT. IN SUPPORT OF HIS CONTENTION THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE UPON THE FOLLOWING JUDGMENTS:- 1. CIT VS. DHINGRA METAL WORKS [2011] 328 ITR 384 (DELHI) 2. CIT VS. S. KHADER KHAN SON [2008] 300 ITR 157 (MADRAS) 3. KAILASHBEN MANHARLAL CHOKSHI VS. CIT [2010] 328 ITR 411 (GUJARAT). 4. CIT VS. BALAJI WIRE (P) LTD. [2008] 304 ITR 393 (DELHI) 5. TDI MARKETING (P) LTD. VS. ACIT [2009] 28 SOT 215 (DELHI) 9. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW AND THE DOCUMENTS PLACED ON RECORD AND THE JUDGMENTS REFERRED TO BY THE PARTIES WE FIND THAT UNDISPUTEDLY THE ASSESSEES OWN CONCERN M/S CHANDRA KISHORE ASHOK KUMAR & SONS AND OTHER SISTER CONCERN M/S DEVI & COMPANY WHICH WAS OWNED BY HER SON WERE RUNNING THEIR BUSINESS AT THE SAME PREMISES I.E. 48/226 GENERAL GANUJ KANPUR. DURING THE COURSE OF SURVEY ON 10.3.2006 THE STATEMENT OF SHRI. SURESH CHANDRA AGARWAL THE MANAGER OF M/S DEVI & COMPANY AND OF THE ASSESSEE WAS RECORDED. IT WAS DEPOSED IN THE STATEMENT THAT STOCK OF THE ASSESSEE-FIRM WAS KEPT AT BASEMENT AND FIRST FLOOR; WHEREAS THE STOCK OF M/S DEVI & COMPANY ARE KEPT AT SECOND AND THIRD FLOOR. BESIDES THE STOCKS OF BOTH THE FIRMS WERE ALSO KEPT AT 55/155 GENERAL GANJ KANPUR. IN HER STATEMENT THE ASSESSEE HAS ALSO DEPOSED THE SAME FACT. IT WAS ALSO DEPOSED THAT IT IS VERY DIFFICULT TO BIFURCATE THE STOCK OF BOTH THE FIRMS. SHE ADMITTED THAT THE SALES AND PURCHASES WERE RECORDED IN THE COMPUTERS. SINCE IT WAS NOT PROPERLY RECORDED IT WAS NOT POSSIBLE TO STATE THE CORRECT STOCK. SHE HAS FURTHER DEPOSED THAT KEEPING IN VIEW THE NATURE OF BUSINESS IT WAS NOT POSSIBLE TO RECONCILE THE STOCK WITH THE BOOKS OF :- 8 -: ACCOUNT. THEREFORE SHE VOLUNTARILY SURRENDERED A SUM OF RS.35 LAKHS ON ACCOUNT OF UNDISCLOSED STOCK IN THE HANDS OF M/S CHANDRA KISHORE ASHOK KUMAR & SONS AND RS.17 LAKHS ON ACCOUNT OF UNDISCLOSED STOCK IN THE HANDS OF M/S DEVI & COMPANY. THIS SURRENDER WAS MADE ON HER OWN WITHOUT ANY PRESSURE. THE REASON FOR SURRENDER WAS STATED THAT IN BOTH THE FIRMS REGISTERS ARE NOT MAINTAINED. THEREFORE POSITION OF THE STOCK CANNOT BE STATED. IT WAS DEPOSED BY THE ASSESSEE THAT SALE/PURCHASE VOUCHERS WERE KEPT IN ALMIRAH BY MY SON SHRI. GAURAV AGARWAL AND ITS KEY IS NOT AVAILABLE THEREFORE THE VALUATION OF STOCK WAS NOT POSSIBLE AS IT IS SPREAD OVER IN FIVE FLOORS OF THE PROPERTY AND THE GODOWNS. MOREOVER IT WAS FURTHER STATED BY THE ASSESSEE THAT ON ACCOUNT OF NON-AVAILABILITY OF STAFF AS THEY HAVE GONE ON VACATION ON ACCOUNT OF HOLI FESTIVAL THE STOCK VALUATION IS NOT POSSIBLE. THE RELEVANT QUESTION ANSWER IN THIS REGARD ARE QUESTION NOS.2 4 AND 6 WHICH ARE EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE:- -2 -2 ? 55/115 - -4 TALLIED MAINTAIN :- 9 -: - DEAL - 35 00 000/- 17 00 000/- SURRENDER SURRENDER MAINTAIN : POSITION 6 1/10 SALE PRICE PURCHASE PRICE SALE PURCHASE VALUATION ? PURCHASE SALE SALE PURCHASE - VALUATION VALUATION :- 10 -: VALUATION UNRECORDED 52 00 000/- : 35 00 000/- 17 00 000/- SURRENDER ......... UNRECORDED SURRENDER ........2006-07 ....... SURRENDER 10. THE STATEMENT WAS RECORDED DURING THE COURSE OF SURVEY OPERATION ON 10.3.2006. THEREAFTER ON 13.3.2006 THE ASSESSEE HAS FILED A LETTER BEFORE THE ASSESSING OFFICER IN RESPONSE TO SUMMONS ISSUED UNDER SECTION 131 OF THE ACT ON 10.3.2006 REQUIRING HER TO PRODUCE THE BOOKS OF ACCOUNT DURING THE FINANCIAL YEARS 2003-04 2004-05 AND 2005-06. THROUGH THIS LETTER THE ASSESSEE HAS QUESTIONED THE JURISDICTION OF THE ASSESSING OFFICER BUT HAS NOT RAISED ANY ISSUE OF FORCED SURRENDER OF RS.35 LAKHS ON ACCOUNT OF UNDISCLOSED STOCK IN THE HANDS OF THE ASSESSEE. THE ASSESSEE HAS NOT LODGED ANY COMPLAINT IN THIS REGARD EITHER BEFORE THE HIGHER AUTHORITIES OF THE INCOME-TAX DEPARTMENT OR POLICE AUTHORITIES. THE ASSESSEE HAS RAISED AN ALLEGATION WITH REGARD TO THE FORCE SURRENDER THROUGH HER WRIT PETITION :- 11 -: FILED BEFORE THE HON'BLE HIGH COURT OF ALLAHABAD IN THE MONTH OF APRIL 2006. THE HON'BLE HIGH COURT OF ALLAHABAD VIDE ITS ORDER DATED 7.1.2008 DISPOSED OF THE PETITION WITH THE OBSERVATION THAT THE CONTENTION OF THE PETITIONER IN THE WRIT PETITION THAT THE SURRENDER WAS NOT VOLUNTARY BUT WAS FORCED BECOMES A HIGHLY DISPUTED QUESTION OF FACT; WHICH CANNOT BE EXAMINED IN WRIT JURISDICTION. THE HON'BLE HIGH COURT ACCORDINGLY HELD THAT THIS QUESTION OF FACT CAN BE EXAMINED IN THE PROCEEDINGS UNDER THE INCOME- TAX ACT. 11. DURING THE COURSE OF HEARING THE LD. D.R. HAS CONTENDED THAT HAD THERE BEEN ANY TRUTH IN THE CONTENTION OF THE ASSESSEE WITH REGARD TO THE FORCED SURRENDER THERE WOULD HAVE BEEN SOME COMPLAINT EITHER WITH THE POLICE AUTHORITIES OR WITH THE HIGHER AUTHORITIES IN THE INCOME-TAX DEPARTMENT. BUT THIS ISSUE WAS NEVER RAISED BY THE ASSESSEE WITH THESE AUTHORITIES THOUGH SHE HAS FILED HER REPLY IN RESPONSE TO NOTICE UNDER SECTION 131 OF THE ACT BEFORE THE ASSESSING OFFICER ON 13.3.2006. IT IS NOT A CASE OF MERE SURRENDER RATHER THE ASSESSEE HAS ALSO MADE PAYMENT OF INCOME-TAX ACCRUED ON THE SURRENDERED AMOUNT. IN THAT SITUATION ALSO HAD THERE BEEN ANY TRUTH IN THE ALLEGATION THE ASSESSEE COULD HAVE STOPPED THE PAYMENT FROM THE BANKERS BUT NOTHING WAS DONE AND THE CHEQUE WAS DULY ENCASHED. WHEN THESE FACTS WERE CONFRONTED TO THE LD. COUNSEL FOR THE ASSESSEE HE HAD NO PLAUSIBLE ANSWER TO IT. THEREFORE WE ARE OF THE CONSIDERED OPINION THAT UNDER THE GIVEN FACTS WHERE THE ASSESSEE HAS MADE A DETAILED EXPLANATION WITH REGARD TO THE RECONCILIATION OF THE STOCK WITH THE BOOKS OF ACCOUNT AND FAILED TO RECONCILE THE SAME SHE MADE A VOLUNTARY SURRENDER OF RS.35 LAKHS IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF UNDISCLOSED STOCK. SHE NOT ONLY SURRENDERED BUT HAS ALSO PAID TAX BY ISSUING CHEQUE OF THE INCOME-TAX OF RS.10 71 000/- WHICH WAS DULY ENCASHED. THEREFORE THE CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED :- 12 -: THAT THE SURRENDER WAS PROCURED BY EXERCISING UNDUE FORCE UPON THE ASSESSEE. 12. NOW THE QUESTION ARISES WHETHER ON THE BASIS OF THE SURRENDERED STATEMENT AND THE PAYMENT OF TAX ACCRUED THEREON THE ADDITION CAN BE MADE WHEN THE ASSESSEE FAILED TO INCORPORATE THE SURRENDERED AMOUNT IN ITS RETURN OF INCOME. 13. IN THIS REGARD OUR ATTENTION WAS INVITED TO VARIOUS JUDICIAL PRONOUNCEMENTS. BUT IN ALL THOSE CASES IT WAS HELD THAT DURING THE COURSE OF SURVEY THE REVENUE AUTHORITIES ARE NOT EMPOWERED TO ADMINISTER OATH TO THE ASSESSEE. THEREFORE THE STATEMENT ON OATH CANNOT BE RECORDED BUT THE STATEMENT OF THE ASSESSEE DURING THE COURSE OF SURVEY OPERATION IS A VALID PIECE OF EVIDENCE THOUGH MAY NOT BE CONCLUSIVE FOR MAKING AN ADDITION. IF ANY ADDITION IS REQUIRED TO BE MADE IT SHOULD BE SUPPORTED BY SOME OTHER EVIDENCE. 14. IN THE CASE OF CIT VS. DHINGRA METAL WORKS (SUPRA) THEIR LORDSHIPS OF THE HON'BLE DELHI HIGH COURT HAS HELD THAT FROM A READING OF THE AFORESAID SECTION IT IS APPARENT THAT IT DOES NOT MANDATE THAT ANY STATEMENT RECORDED UNDER SECTION 133A OF THE ACT WOULD HAVE EVIDENTIARY VALUE. BUT FOR A STATEMENT TO HAVE EVIDENTIARY VALUE THE SURVEY OFFICER SHOULD HAVE BEEN AUTHORISED TO ADMINISTER OATH AND TO RECORD SWORN STATEMENT. THIS WOULD ALSO BE APPARENT FROM SECTION 132(4) OF THE ACT. IT WAS FURTHER HELD THAT THOUGH AN ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE IT CANNOT BE SAID TO BE CONCLUSIVE AND IT IS OPEN TO THE PERSON WHO HAS MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT. IN THAT CASE THE ASSESSEE WAS ABLE TO EXPLAIN THE DISCREPANCY IN THE STOCK FOUND DURING THE COURSE OF SURVEY BY PRODUCING THE RELEVANT RECORD INCLUDING THE EXCISE REGISTER OF THE COMPANY. THEREFORE THE HON'BLE HIGH COURT HAS HELD THAT THE ASSESSING OFFICER COULD NOT HAVE MADE THE AFORESAID ADDITION SOLELY ON :- 13 -: THE BASIS OF THE STATEMENT MADE ON BEHALF OF THE RESPONDENT-ASSESSEE DURING THE COURSE OF SURVEY. 15. BUT IN THE INSTANT CASE THE FACTS ARE NOT SIMILAR. IN THIS CASE THE ASSESSEE HAS NOT ALLOWED THE SURVEY TEAM TO VALUE THE STOCK AND TO COMPARE WITH THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. DURING THE COURSE OF SURVEY OPERATION THE ASSESSEE HERSELF HAS ADMITTED THAT STOCK WAS SPREAD OVER DIFFERENT FLOORS OF THE PROPERTY AND GODOWNS WHICH COULD NOT BE VALUED; MORE SO IN THE ABSENCE OF SUFFICIENT STAFF. HAVING REALIZED THAT THE STOCK COULD NOT BE VALUED OR RECONCILED WITH THE BOOKS OF ACCOUNT SHE MADE A VOLUNTARY SURRENDER. SHE DID NOT STOP THERE BUT SHE FURTHER ISSUED A CHEQUE TO THE INCOME-TAX DEPARTMENT ON THE SURRENDERED AMOUNT AND ALLOWED IT TO BE ENCASHED EVEN AFTER CONCLUSION OF THE SURVEY. THEREFORE THE AFORESAID JUDGMENT WOULD NOT RENDER ANY HELP TO THE ASSESSEE AS IT IS DISTINGUISHABLE ON FACTS. 16. SIMILAR IS THE POSITION IN THE CASE OF KAILASHBEN MANHARLAL CHOKSHI VS. CIT (SUPRA). IN THAT CASE THE STATEMENT WAS RECORDED UNDER SECTION 132(4) OF THE ACT BUT LATER ON IT WAS RETRACTED AND ASSESSEE HAS FURNISHED PROPER EVIDENCE IN SUPPORT OF RETRACTION OF THE SURRENDERED STATEMENT WHICH WAS MADE AT MIDNIGHT UNDER PRESSURE AND COERCION. BUT IN THE PRESENT CASE EXCEPT ORAL SUBMISSION NOTHING WAS PLACED ON RECORD TO ESTABLISH THAT THE SURRENDERED STATEMENT WAS OBTAINED UNDER PRESSURE OR COERCION. 17. IN THE INSTANT CASE THE IMPORTANT FACTOR WHICH CANNOT BE IGNORED IS THAT AFTER COMPLETION OF THE SURVEY THE ASSESSEE HERSELF HAS ALLOWED TO GET THE CHEQUE ENCASHED BY THE INCOME-TAX DEPARTMENT ON THE SURRENDERED AMOUNT; MORE SO SHE HAS ALSO FILED A LETTER BEFORE THE ASSESSING AUTHORITY AFTER THREE DAYS AND EVEN IN THAT LETTER SHE HAS NOT RAISED ANY ISSUE OR DISPUTED THE VOLUNTARY SURRENDER OF RS.35 LAKHS IN THE HANDS OF THE ASSESSEE. SINCE THE ASSESSEE HERSELF HAS NOT ALLOWED THE SURVEY TEAM TO :- 14 -: VALUE THE STOCK AVAILABLE WITH THE ASSESSEE NOW SHE CANNOT TAKE A PLEA THAT THE ADDITION ON THE BASIS OF SURRENDERED AMOUNT CANNOT BE MADE AS THE ASSESSING OFFICER COULD NOT PLACE ANY CORROBORATIVE EVIDENCE EXCEPT SURRENDER STATEMENT. THEREFORE THIS JUDGMENT WOULD NOT RENDER ANY HELP TO THE ASSESSEE. 18. IN THE CASE OF CIT VS. BALAJI WIRE (P) LTD. (SUPRA) THE STATEMENT WAS RECORDED UNDER SECTION 132(4) OF THE ACT. IN THAT CASE ALSO IT WAS HELD THAT SINCE STATEMENT WAS RECORDED AFTER SEARCH PROCEEDINGS AND FURTHER NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH SHOWING THAT THE ASSESSEE HAD ANY UNDISCLOSED INCOME ADDITION MADE BY THE ASSESSING OFFICER SOLELY ON THE BASIS OF THE STATEMENT HAS TO BE DELETED. IN THAT CASE THE STATEMENT WAS RECORDED DURING THE COURSE OF SEARCH WITH RESPECT TO THE MATERIAL FOUND. BUT THE ASSESSING OFFICER COULD NOT ESTABLISH THAT ANY INCRIMINATING MATERIAL WAS FOUND WITH REGARD TO THE STATEMENT. IN THESE FACTS FOR UNDISCLOSED INCOME ADDITION COULD NOT BE MADE. 19. BUT IN THE INSTANT CASE ADDITION WAS MADE ON ACCOUNT OF UNDISCLOSED STOCK WITH REGARD TO WHICH THE ASSESSEE HERSELF HAS MADE A STATEMENT THAT IT CANNOT BE VALUED ON ACCOUNT OF SHORTAGE OF STAFF AND THE STOCK WAS SPREAD OVER IN FIVE FLOORS OF THE BUILDING AND GODOWNS. 20. IN THE CASE OF TDI MARKETING (P) LTD. VS. ACIT (SUPRA) SIMILAR VIEWS WERE EXPRESSED BY THE TRIBUNAL. 21. IN ALL THESE CASES THE ADDITION ON THE BASIS OF STATEMENT RECORDED DURING THE COURSE OF SURVEY OPERATION OR SEARCH COULD NOT BE MADE BECAUSE THE ASSESSEE COULD EXPLAIN THE DISCREPANCIES NOTICED DURING THE COURSE OF SURVEY OR SEARCH BY PLACING RELEVANT EVIDENCE. IN THOSE CASES THE ASSESSEE HAS PLACED SOME MATERIAL TO ESTABLISH THAT THE SURRENDERED STATEMENT WAS PROCURED UNDER FORCE OR COERCION. BUT IN THE INSTANT CASE THE ASSESSEE HAS NOT ALLOWED THE SURVEY TEAM TO VALUE THE STOCK ON THE PRETEXT THAT IT WAS SPREAD OVER IN FIVE FLOORS AND GODOWNS AT DIFFERENT :- 15 -: PLACES AND ALSO STAFF WAS NOT AVAILABLE AS THEY WERE ON LEAVE ON ACCOUNT OF HOLI FESTIVAL. ON ACCOUNT OF NON-COOPERATION OF THE ASSESSEE THE STOCK COULD NOT BE VALUED AND WHEN THE ASSESSEE HERSELF HAS REALIZED THAT THE STOCK COULD NOT BE RECONCILED WITH THE BOOKS OF ACCOUNT SHE MADE A STATEMENT THAT STOCK AVAILABLE COULD NOT BE RECONCILED WITH THE BOOKS OF ACCOUNT MAINTAINED BY HER AND THEREFORE SHE CAME FORWARD AND MADE A VOLUNTARY SURRENDER OF RS.35 LAKHS IN THE HANDS OF THE ASSESSEE. SHE DID NOT STOP AT THIS STAGE SHE FURTHER ISSUED A CHEQUE OF RS.10 71 000/- AND ALLOWED IT TO BE ENCHASHED AFTER TWO DAYS. HAD IT BEEN A CASE OF FORCED SURRENDER THE ASSESSEE COULD HAVE GOT THE CHEQUE STOPPED FROM HER BANKER HAVING REALIZED THAT HER SURRENDER STATEMENT WAS OBTAINED OR PROCURED BY THE SURVEY TEAM BY FORCE BUT IT WAS NOT DONE; RATHER THE ASSESSEE HAS ALSO SUBMITTED ONE LETTER TO THE ASSESSING OFFICER IN WHICH SHE HAS NOT DISPUTED THE SURRENDER MADE BY HER. SHE RAISED A DISPUTE IN THIS REGARD FIRST TIME WHEN SHE FILED A WRIT PETITION BEFORE THE HON'BLE HIGH COURT OF ALLAHABAD. 22. UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE CONSIDERED OPINION THAT ON THE BASIS OF THE SURRENDERED STATEMENT AND ISSUANCE OF CHEQUE OF INCOME-TAX ADDITION CAN BE MADE ON THE BASIS OF THE SURRENDERED STATEMENT AS THE ASSESSEE HAS NOT MADE ANY EFFORT TO RECONCILE THE STOCK AVAILABLE WITH THE BOOKS OF ACCOUNT. ACCORDINGLY WE DO NOT FIND OURSELVES IN AGREEMENT WITH THE ORDER OF THE LD. CIT(A) WHO HAS NOT TAKEN INTO ACCOUNT ALL THESE FACTS WHILE DELETING THE ADDITION. WE ACCORDINGLY SET ASIDE HIS ORDER AND RESTORE THAT OF THE ASSESSING OFFICER. 23. NEXT GROUND RELATES TO THE ADDITION OF RS.20 LAKHS ON ACCOUNT OF LESS PROFIT SHOWN BY THE ASSESSEE. 24. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS EXAMINED THE GROSS PROFIT RATE SHOWN BY THE ASSESSEE AS WELL AS ITS SISTER CONCERN M/S DEVI & COMPANY WHICH IS ALSO RUNNING ITS BUSINESS IN :- 16 -: THE SAME PREMISES. M/S DEVI & COMPANY HAS SHOWN GROSS PROFIT RATE AT 6.35% WHEREAS THE ASSESSEE COMPANY HAS DECLARED GROSS PROFIT RATE AT 4.74%. WHEN THE ASSESSEE WAS ASKED TO EXPLAIN THE REASONS FOR LESSER GROSS PROFIT RATE IN THE ASSESSEES CASES ALTHOUGH BOTH THE CONCERNS ARE ENGAGED IN THE SAME LINE OF BUSINESS AND AT SAME PREMISES IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT THE ASSESSEE WAS ENGAGED IN WHOLESALE BUSINESS AND M/S DEVI & COMPANY WAS DOING BUSINESS IN WHOLESALE BUT PARTLY IN RETAIL ALSO. MOREOVER THE TOTAL SALES OF THE ASSESSEE-COMPANY WERE RS.17 37 55 744/-; WHEREAS THE SALES OF M/S DEVI & COMPANY WERE AT RS.11 93 96 327/-. ON ACCOUNT OF HIGHER TURNOVER IN WHOLESALE BUSINESS THE MARGIN OF PROFIT WAS LESS. THEREFORE THOUGH THE GROSS PROFIT RATE WAS SHOWN AT 4.74% BUT THE TOTAL PROFIT SHOWN IN THE ASSESSEES CASE WAS OF RS.82 51 008/- IN COMPARISON TO PROFIT OF RS.75 77 171/- IN THE CASE OF M/S DEVI & COMPANY. THEREFORE THE GROSS PROFIT RATE SHOWN BY THE ASSESSEE SHOULD BE ACCEPTED. THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE EXPLANATIONS FURNISHED BY THE ASSESSEE AND HE NOTED THAT DIFFERENCE OF 1.61% IN THE GROSS PROFIT RATE IS SHOWN IN BOTH THE CONCERNS AND HE ACCORDINGLY MADE AN ADDITION OF RS.20 LAKHS IN THE HANDS OF THE ASSESSEE. 25. ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND REITERATED HER CONTENTIONS WHICH WAS ACCEPTED BY THE LD. CIT(A) AND DELETED THE ADDITION. 26. NOW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AND HAS PLACED RELIANCE UPON THE ORDER OF THE ASSESSING OFFICER. 27. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND HAS SUBMITTED THAT THE ASSESSEE HAS BEEN DECLARING GROSS PROFIT RATE BETWEEN 4.78% AND 4.35% DURING THE ASSESSMENT YEARS 2003-04 TO 2009-10. MOREOVER THE ASSESSEE WAS DOING WHOLESALE BUSINESS; WHEREAS M/S DEVI & COMPANY WAS DOING BUSINESS IN WHOLESALE AS WELL AS IN RETAIL AND IN CASE OF RETAIL BUSINESS THE MARGIN OF PROFIT WILL BE MORE AND ON ACCOUNT OF THIS THE PROFIT :- 17 -: OF M/S DEVI & COMPANY WAS SHOWN @ 6.5% IN COMPARISON TO 4.74% DECLARED IN THE CASE OF THE ASSESSEE. 28. HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES WE FIND THAT THE ASSESSING OFFICER HAS NOTED THAT BOTH THE CONCERNS ARE DOING SIMILAR TYPE OF BUSINESS WITH VERY SLIGHT VARIATION IN THE CASE OF M/S DEVI & COMPANY AT THE SAME ADDRESS. THEREFORE HE MADE AN ADDITION OF RS.20 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE. THOUGH THE LD. CIT(A) HAS ACCEPTED THE CONTENTIONS OF THE ASSESSEE BUT HE HAS NOT MENTIONED ANYWHERE IN HIS ORDER AS TO HOW MUCH BUSINESS WAS UNDERTAKEN BY THE ASSESSEE ON RETAIL BASIS; WHEREAS THE ASSESSING OFFICER HAS MENTIONED IN HIS ORDER THAT M/S DEVI & COMPANY WAS DOING BUSINESS IN WHOLESALE BUT PARTLY IN RETAIL BASIS ALSO. HE HAS ALSO MENTIONED THAT BOTH THE CONCERNS WERE DOING SIMILAR BUSINESS WITH SLIGHT VARIATION IN TERMS OF RETAIL BUSINESS OF M/S DEVI & COMPANY. BUT NONE OF THE AUTHORITIES HAVE MENTIONED NOWHERE IN THE ORDER THAT HOW MUCH PERCENTAGE OF BUSINESS WAS WHOLESALE AND RETAIL IN THE CASE OF M/S DEVI & COMPANY. UNDISPUTEDLY THE ASSESSEE WAS ENGAGED IN WHOLESALE BUSINESS AND IN THE WHOLESALE BUSINESS THE GROSS PROFIT IS ALWAYS LESS COMPARED TO RETAIL BUSINESS. MOREOVER WHILE ESTIMATING THE GROSS PROFIT RATE WHILE MAKING THE ADDITION IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF LESS GROSS PROFIT RATE THE ASSESSING OFFICER HAS NOT REJECTED THE BOOKS OF ACCOUNT. IF THE ASSESSING OFFICER IS NOT ABLE TO ACCEPT THE BOOK RESULTS DECLARED BY THE ASSESSEE FOR ANY REASON HE SHOULD HAVE REJECTED THE BOOKS OF ACCOUNT THEN ESTIMATED THE GROSS PROFIT BUT IT WAS NOT DONE. IN THE ORDER OF THE LD. CIT(A) IT IS MENTIONED THAT THE ASSESSEE HAS BEEN DECLARING GROSS PROFIT RATE BETWEEN 4.78% AND 4.35% DURING THE ASSESSMENT YEAR 2003-04 TO 2009-10. THEREFORE IN THE LIGHT OF THESE FACTS THE GROSS PROFIT RATE DECLARED BY THE SISTER CONCERN WHICH IS ENGAGED IN DIFFERENT NATURE OF BUSINESS CANNOT BE ACCEPTED. RATHER THE :- 18 -: ASSESSEE HERSELF HAS DECLARED GROSS PROFIT RATE AT 4.74% WHICH IS ALSO HIGHER THAN THE GROSS PROFIT RATES DECLARED IN OTHER YEARS. THEREFORE WE ARE OF THE VIEW THAT THE GROSS PROFIT RATE DECLARED BY THE ASSESSEE SHOULD HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER. ACCORDINGLY WE FIND OURSELVES IN AGREEMENT WITH THE ORDER OF THE LD. CIT(A) WHO HAS RIGHTLY DELETED THE ADDITION IN THIS REGARD. ACCORDINGLY THE APPEAL OF THE REVENUE IS DISPOSED OF. 29. THE CROSS OBJECTION FILED BY THE ASSESSEE IS IN SUPPORT OF THE ORDER OF THE LD. CIT(A). THE CONTENTIONS RAISED IN THE CROSS OBJECTION WERE ALSO EXAMINED WHILE ADJUDICATING THE APPEAL OF THE REVENUE ON MERIT THEREFORE IT NEEDS NO INDEPENDENT ADJUDICATION. 30. IN THE RESULT APPEAL OF THE REVENUE IS PARTLY ALLOWED AND CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- [A. K. GARODIA] [SUNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 21 ST NOVEMBER 2014 JJ:121311 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR