ASSTT.C.I.T.CIRCLE 19(3), MUMBAI v. M/S. AL QURESH EXPORT, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: MUMBAI BEFORE SHRI R.S. SYAL ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR JUDICIAL MEMBER ITA NO.6733/MUM/2008 (ASSESSMENT YEAR: 2005-06) ACIT-19(3) ROOM NO.305 3RD FLOOR PIRAMAL CHAMBERS PAREL MUMBAI -400 012 ....REVENUE VS M/S. AL QURESH EXPORT ROOM NO.310 3 RD FLOOR A WING RIZVI CHAMBERS HILL ROAD BANDRA (W) MUMBAI 400 050 ASSESSEE PAN: AADFA 1272 M ASSESSEE BY: SHRI P. DANIEL REVENUE BY: SHRI R.S. SRIVASTAVA O R D E R PER R.S. PADVEKAR JM THIS APPEAL IS FILED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER OF THE LD. CIT (A) XIX MUMBAI DATED 19.9.2008 FOR THE A.Y. 2005-06. 2. FROM THE GROUNDS TAKEN BY THE REVENUE THE ISSUE BEFORE IS WHETHER THE LD. CIT (A) IS JUSTIFIED IN DELETING THE ADDITI ON OF ` 1 91 00 000/- MADE BY THE A.O. ON THE BASIS OF THE STATEMENT RECO RDED DURING THE COURSE OF THE SURVEY U/S.133A OF THE ACT. ITA 6733/M/2008 M/S. AL QURESH EXPORT 2 3. THE RELEVANT FACTS WHICH REVEALED FROM THE RECOR D ARE AS UNDER. THE ASSESSEE IS A REGISTERED FIRM WHICH IS ENGAGED IN THE BUSINESS OF MEAT AND EGGS EXPORTS. THERE WAS A SURVEY ACTION U /S.131A OF THE ACT IN THE BUSINESS PREMISES OF THE ASSESSEE ON 1.2.2005. DURING THE COURSE OF THE SURVEY PROCEEDINGS IT WAS FOUND BY THE A.O. TH AT AS PER THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE ON THE COMPUTER THE BILLS AND THE VOUCHERS WERE ENTERED ONLY UPTO 29.1.2005. THE CAS H BALANCE WAS FOUND AT ` 14 500/-. THE A.O. RECORDED THE STATEMENT OF SHRI SHAKIR HUSAIN QURESHI (IN SHORT SHRI SHQ) WHO IS A PARTNER OF THE ASSESSEE- FIRM. IN THE STATEMENT GIVEN TO THE A.O. DURING T HE COURSE OF THE SURVEY THE A.O. CONFRONTED SHRI SHQ BY PUTTING QUESTION IN RESPECT OF SOME OF THE PURCHASES. ACCORDING TO THE A.O. THEY WERE NO T COORDINATED WITH THE BILLS. SHRI SHQ OFFERED ` 1 90 00 000/- AS AN ADDITIONAL INCOME FOR THE A.Y. 2005-06. HE ALSO AGREED TO PAY THE TAX ON THE SAID AMOUNT AND GAVE TWO CHEQUES OF AN AMOUNT OF RS 25 LAKHS DATED 7.2.2005 AND ` 45 LAKHS PAYABLE ON OR BEFORE 12.3.2005. 4. SUBSEQUENTLY THE ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y. 2005-06 ON 22.10.2005 DECLARING TOTAL INCOME AT RS 3 22 95 985/-. THE RETURN FILED BY THE ASSESSEE WAS SELECTED FOR SCRUT INY. IT WAS NOTICED BY THE A.O. THAT AS PER THE PROFIT AND LOSS ACCOUNT T HE ASSESSEE HAS NOT DISCLOSED THE INCOME OFFERED AT THE TIME OF THE SUR VEY. THE A.O. HAS GIVEN THE SUMMARY OF THE PROFIT AND LOSS ACCOUNT AT PAGE NO.2 OF THE ASSESSMENT ORDER. THE ASSESSEE HAS DECLARED THE NE T PROFIT (BEFORE PAYMENT TO PARTNERS) AT ` 3 94 32 571/-. THE A.O. SOUGHT THE EXPLANATION OF THE ASSESSEE FOR NOT DECLARING THE I NCOME OFFERED BY ONE OF HIS PARTNERS DURING THE COURSE OF THE SURVEY ACTION TO THE EXTENT OF RS 1 91 00 000/-. THE ASSESSEE FILED THE REPLY ON 12. 11.2007 BY STATING THAT IN RESPECT OF THE STATEMENT RECORDED ON 1.2.20 05 OF SHRI SHQ WHO IS ONE OF THE PARTNERS OF THE ASSESSEE-FIRM THE F INANCIAL YEAR HAD NOT ITA 6733/M/2008 M/S. AL QURESH EXPORT 3 ENDED AND THE TRANSACTIONS/AMOUNTS WHICH WERE CONF RONTED TO THE PARTNER WERE ALREADY DEBITED IN THE BOOKS OF ACCOUN T AS PAYMENTS TO THE PARTIES BUT ONLY THE ENTRIES WERE PENDING. IT WAS C ONTENDED THAT IMMEDIATELY ON THE NEXT DATE (DAY) ENTRIES WERE MAD E AND SUBMITTED TO THE DEPARTMENT. IT WAS FURTHER STATED THAT NO QUER Y WAS RAISED BY THE DEPARTMENT ON SUBMISSION OF THE INFORMATION. IT WA S ALSO STATED THAT NOTHING WAS FOUND EXCESS LIKE CONCEALED INVESTMENT OR ANY OTHER ENTRIES NOT REFLECTED IN THE BOOKS OF ACCOUNT WHEREBY IT CA N BE CONCLUDED THAT THE ASSESSEE HAS NOT RECORDED THE INCOME IN THE BOO KS OF ACCOUNT. THE ASSESSEE ALSO CONTENDED BEFORE THE A.O. THAT ALL TH E COPIES OF THE BILLS WITH THE VOUCHERS OF THE BILLS OF ACCOUNT AT THE TI ME OF THE SURVEY HAVE BEEN EXPLAINED FULLY AND HENCE THERE IS NO QUESTION OF ANY ADDITIONAL INCOME BEING OFFERED FULLY AND HENCE THERE IS NO QU ESTION OF ANY ADDITIONAL INCOME BEING OFFERED IN ADDITION TO THE INCOME ALREADY DECLARED AS PER THE BOOKS OF ACCOUNTS. 5. THE A.O. WAS NOT IMPRESSED WITH THE EXPLANATION OF THE ASSESSEE. THE A.O. HAS REPRODUCED THE STATEMENT OF SHRI SHQ R ECORDED ON 1.2.2005; ON PAGES 3 TO 5 OF THE ASSESSMENT ORDER. THE A.O. ALSO REFERRED TO SOME OF THE DECISIONS AND FINALLY MADE THE ADDITION OF RS 1.91 CRORES BY GIVING FOLLOWING REASONS:- 9.ON THE ANALYSIS OF ABOVE JUDICIAL PRONOUNCEMENT THE FOLLOWING FACTS ARE EMERGING: I) STATEMENT GIVEN DURING THE COURSE OF SURVEY / SEARC H ACTION IS A VERY IMPORTANT PIECE OF EVIDENCE AND HAS A VERY H IGH RELIABLE EVIDENTIARY VALUE. II) IF THERE IS ANY ISSUE OF THREAT OR COERCION THEN A SSESSEE MUST HAVE BROUGHT IT INTO THE KNOWLEDGE OF HIGHER AUTHOR ITIES IMMEDIATELY. ITA 6733/M/2008 M/S. AL QURESH EXPORT 4 III) THE ASSESSEE SHOULD PROVE THAT THE STATEMENT HAS GI VEN IN A CONFUSED STATE OF MIND. THIS FACT MUST BE PROVED B Y THE ASSESSEE WITH THE RELIABLE EVIDENCE. IV) THE RETRACTION AFTER A LAPSE OF CERTAIN PERIOD OF T IME DOESNT HAS ANY MEANING. V) IN THE CASE OF S.C. GUPTA THE ALLAHABAD HIGH COURT HAS CLEARLY HELD THAT ADDITION MADE ON THE BASIS OF STA TEMENT GIVEN AT THE TIME OF THE SURVEY ACTION IS LIABLE TO THE UPHELD UNLESS THE ASSESSEE ESTABLISH THAT THE ADMISSION M ADE WAS WRONG AND IN FACT THERE WAS NO ADDITIONAL INCOME. 10. IN THE LIGHT OF ABOVE OBSERVATION IF WE COMPAR E THE CASE OF ASSESSEE UNDER CONSIDERATION THE FOLLOWING FACTS A RE EMERGING: I) SURVEY WAS BEEN DONE ON 2 ND FEBRUARY 2005 AND THE ASSESSEE WAS UNABLE TO RECONCILE THE DISCREPANCIES POINTED OUT AT THE TIME OF SURVEY. II) AFTER SEEING DISCREPANCY THE ASSESSEE HAS DECL ARED RS 1.91 CR. AS AN ADDITIONAL INCOME FOR THE F.Y. 2004- 05. III) AT THE TIME OF THE SURVEY ITSELF THE ASSESSEE HAS GIVEN A CHEQUE OF RS 70 LAKHS FOR THE PAYMENT OF THE TAXES ON ADDITIONAL INCOME. IV) IN THE SURVEY ITSELF THE ASSESSEE HAS GIVEN A COMMITMENT THAT THE DECLARATION MADE WILL NOT BE RETRACTED. V) THE ASSESSEE HAS NEVER RETRACTED THE STATEMENT T ILL DATE. ITA 6733/M/2008 M/S. AL QURESH EXPORT 5 VI) ON 12 TH NOVEMBER 2007 THE ASSESSEE HAS SUBMITTED A LETTER THAT THERE WAS NO QUESTION OF ANY ADDITIONA L INCOME AS PER THE BOOK OF ACCOUNT. FIRST TIME TH E ASSESSEE HAS DENIED HIS LIABILITY OF HAVING ADDITIO NAL INCOME FOR THE RELEVANT FINANCIAL YEAR. 6. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT (A). THE ASSESSEE CONTENDED THAT THE ASSESSEE BUYS THE RAW M EAT MAINLY FROM BELGAUM SAHARANPUR & MEERUT (U.P.) DELHI AND MUMB AI WHICH IS EXPORTED AFTER FREEZING. IT WAS EXPLAINED THAT AS SOON AS THE MEAT IS RECEIVED AT THE PLANT THE SAME IS SENT FOR FREEZIN G AND INTIMATION IS RECEIVED AT HEAD OFFICE IN BOMBAY AND A PRINTED SER IAL NUMBERED PURCHASE VOUCHERS ARE PREPARED. AS PER THE PREVAIL ING PRACTICE IN THE SAID TRADE PAYMENTS FOR THE PURCHASES WERE MADE EV ERY WEEK. A PROCESS FOR PAYMENT IN THE WEEKLY STATEMENT GIVING THE DETAILS OF THE QUANTITY OF THE GOODS PURCHASED THE NAME OF THE PA RTY FROM WHOM THE GOODS WERE PURCHASED RATE AND AMOUNT IS RECEIVED A T THE HEAD OFFICE AND ACCORDINGLY THE PAYMENTS ARE MADE EITHER DIRECT LY THROUGH THE ASSESSEES BANK A/C. I.E. ICICI BANK BY TRANSFERRI NG THE AMOUNT IN THE ACCOUNT OF THE SUPPLIER PARTY OR TO THE ASSESSEES OWN BANK ACCOUNT FROM WHERE THE ASSESSEES PERSON STATIONED THE PLANT MAK ES THE PAYMENTS TO THE SUPPLIERS BUT ALL INVARIABLY BY ACCOUNT PAYEE C HEQUES ONLY. IT WAS ALSO CONTENDED THAT THE GOODS ARE DIRECTLY EXPORTED FROM THE PLANT AND HENCE THERE IS TIME-GAP OF 12-15 DAYS TIME BETWEEN THE PURCHASE OF THE GOODS AND ITS EXPORT. THE ASSESSEE ALSO CONTENDED THAT THE ASSESSEE HAS GIVEN COMPLETE QUANTITY DETAILS OF THE GOODS AND IT S EXPORTS. ALL THE PURCHASE AND SALES ARE ACCOUNTED IN THE REGULAR BOO KS OF ACCOUNT. IT WAS CONTENDED THAT THOUGH CASH BOOK WAS WRITTEN UPT O 30.9.2004 BUT THE BOOKS OF ACCOUNT ON THE COMPUTER WERE UPDATED U P TO 29.1.2005 MAKING ENTRIES OF ALL THE BILLS AND VOUCHERS. IT W AS FURTHER CONTENDED ITA 6733/M/2008 M/S. AL QURESH EXPORT 6 THAT IN THE COURSE OF THE SURVEY ACTION THE A.O. N OTICED THAT THERE WERE CERTAIN PAYMENTS RECORDED IN THE BOOKS TOWARDS PURC HASES MADE BUT THE BILLS WERE NOT READILY AVAILABLE AND IN VERY HU RRIED MANNER WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSEE CONCLUDED TH AT PURCHASES TO THE EXTENT OF RS 1 86 60 236/- WERE NOT RECORDED AS RE LEVANT BILLS WERE NOT READILY AVAILABLE. THOUGH RELEVANT BILLS WERE NOT READILY AVAILABLE AT THAT TIME BUT ALL THE TRANSACTIONS WERE RECORDED AND ENT IRE RECORD WAS IMMEDIATELY SUBMITTED TO THE A.O. IN THE POST SURVE Y PROCEEDINGS WHICH WERE COMPLETELY CROSS-VERIFIED FROM THE SUPPLIER-PA RTIES WHO WERE REGULAR SUPPLIERS TO ALL THE PARTIES. THE ASSESSEE FURTHER CONTENDED THAT THERE WAS NO LEGAL BASE FOR MAKING THE ADDITION MERELY ON THE BASIS OF THE STATEMENT RECORDED DURING THE COURSE OF THE SURVEY PROCEEDINGS. 7. THE ASSESSEE ALSO CONTENDED THAT THE PAYMENTS AR E MADE THROUGH BANKING CHANNELS WHICH RECORD IS AVAILABLE IN THE BOOKS MAINTAINED ON THE COMPUTER. IT WAS ALSO CONTENDED THAT THE ENTIR E DETAILS OF THE PAYMENT ALONG WITH THE DETAILS OF THE PURCHASE BILL S WERE SUBMITTED TO THE A.O. IN THE POST SURVEY PROCEEDINGS AND NO QUER Y WAS RAISED THEREAFTER. THE ASSESSEE ALSO CONTENDED THAT AT TH E TIME OF THE SURVEY CERTAIN BILLS WERE NOT FOUND. IT WAS STATED THAT I N THE COURSE OF HIS BUSINESS THE ASSESSEE GETS HUNDREDS OF BILLS AND I N THE PROCESS IT IS QUITE POSSIBLE THAT THE STAFF WHILE FILING THE SAID BILLS IN RESPECTIVE PURCHASE BILL FILES MIGHT HAVE MISFILED THE SAME AN D HENCE IN CONFUSION THE SAID STATEMENT WAS GIVEN. IT WAS CONTENDED THA T THERE WAS ALLEGED DISCREPANCY IN THE RECORD MAINTAINED BY THE ASSESSE E. THE LD. CIT (A) ACCEPTED THE PLEA OF THE ASSESSEE ON THAT EXCEPT NO ADDITION CAN BE MADE MERELY ON THE BASIS OF THE STATEMENT RECORDED DURIN G THE COURSE OF THE SURVEY ACTION AND LD. CIT (A) DELETED THE ADDITION. THE OPERATIVE PARTS OF THE FINDINGS AND REASONING ARE GIVEN IN PARA 6.8 W HICH READS AS UNDER:- ITA 6733/M/2008 M/S. AL QURESH EXPORT 7 6.8. COMING TO THE DISCREPANCY OR ISSUE OF NON E NTRY OF PURCHASE BILLS IN RESPECT OF WHICH PURCHASE WERE MADE AT THE TIME OF SURVEY IT IS OBSERVED THAT SUBSEQUENT TO THE STATEMENT RECORD ED ON SURVEY DAY THE APPELLANT DID FILE ALL THE DOCUMENTS IN THE INCOME-TAX OFFICE. IT ESTABLISHED THAT NAME AND ADDRESSES OF THE PARTI ES (6 IN NUMBERS) FROM WHOM PURCHASES WERE MADE WITH ALL SUPPORTING D OCUMENTS. THESE DOCUMENTS WERE CROSS VERIFIABLE AND THEY PERT AINED TO REGULAR SUPPLIERS. IN THE REMAND REPORT ALSO THE AO HAS CO NFIRMS THAT THE PURCHASE BILLS FROM 6 PARTIES OF VALUE OF RS 1 86 6 0 236/- ON WHICH THE DISCREPANCY WAS ALLEGED WAS PRODUCED IN POST SU RVEY PROCEEDINGS. THE APPELLANT ALSO FURNISHED BILL-WIS E DETAILS OF SAID PURCHASES FOR WHICH PAYMENT BY CHEQUE WAS RECORDED IN THE BOOKS OF ACCOUNTS. THUS IT IS OBVIOUS THAT THE ADDITIONAL INCOME DISCL OSED BY THE APPELLANT WAS NOT BASED ON ANY DOCUMENTARY EVIDENCE . NO MATERIAL IS FOUND OR IMPOUNDED IN THE SURVEY TO COR ROBORATE THE CONFESSION OF CONCEALED INCOME NOR INVESTIGATED AND DECLARED LATER IN POST SURVEY OR ASSESSMENT PROCEED ING WHICH FOLLOWED. A STATEMENT SO MADE CAN NOT BE THE END O F THE MATTER AND THE AO WAS EXPECTED TO DIG OUT FRESH FAC TS AND CORROBORATE ITS FINDINGS. A STATEMENT RECORDED DUR ING THE COURSE OF SURVEY CAN BE MADE THE BASIS OF ASSESSMEN T U/S.143(3) ONLY IT IF IT IS LINKED TO EVIDENCES. T HE REPLY TO Q. NO.11 IN WHICH THE SO CALLED DECLARATION HAS BEEN M ADE IS PREMATURE AND APPEARS DUMB TO SAY THE LEAST. THE TRANSACTION OR MANNER IN WHICH SUCH ADDITIONAL INCO ME WAS EARNED AND THE DOCUMENTS ON THE BASIS OF WHICH SUCH INCOME WAS OFFERED TO TAX WAS NEVER ESTABLISHED AT THE TIM E OF SURVEY OR THEREAFTER IN ANY PROCEEDINGS UNDER THE ACT. ITA 6733/M/2008 M/S. AL QURESH EXPORT 8 SURVEY IS ESSENTIALLY AN EVIDENCE GATHERING EXERCIS E. A STATEMENT OF FACTS FOUND DURING THE SURVEY CAN BE R ECORDED. A SURVEYED PARTY CAN MAKE VOLUNTARY CONFESSION BASED ON RELIABLE EVIDENCES OF THE FACTS FOUND DURING THE SU RVEY. IN THE PRESENT CASE THE DECLARATION IS DEVOID OF ANY CREDI BLE / RELIABLE EVIDENCE OR MATERIAL. IT IS AN ESTABLISHED POSITION OF LAW THAT IF A DISC LOSURE IS MADE BY THE ASSESSEE THE ASSESSEE EITHER UNDER MIST AKEN BELIEF OF FACTS AND LAW DUE TO MENTAL PRESSURE FROM THE SURVEY PARTY OR UNDER COERCION HE CAN RETRACT THE STATEMEN T AND THE ADMISSION SO MADE. IN THE PRESENT CASE WHEN THE AP PELLANT HAS PRODUCED ALL THE SUPPORTING DOCUMENTS LATER IN RESPECT OF PURCHASES WHICH WERE ALLEGED TO BE BOGUS ON THE DAT E OF SURVEY THE CASE OF MISTAKEN BELIEF OF FACTS IS ALSO MADE OUT. THERE APPEARS NO REASON FOR ANY NORMAL ADULT MALE P ERSON TO MAKE SUCH DISCLOSURE IF HIS TRANSACTIONS ARE GENUIN E AS IS THE CIRCUMSTANCES IN THE PRESENT CASE. THIS ASPECT ALS O CASTS SERIOUS DOUBTS ABOUT THE RECORDING OF STATEMENT IN AN OPEN AND FAIR MANNER WITHOUT ANY COERCION AND PRESSURE. THE VERY FACT THE COMMITMENT TO OBTAIN TWO CHEQUES HAS ALSO BEEN OBTAINED BETRAYS A LACK OF TRUST OR CONFIDENCE OF T HE SURVEYING AUTHORITY. IF A PERSON MAKES A VOLUNTARY CONFESSIO N BASED ON SOLID EVIDENCE AND FACTS THEN HE WILL VOLUNTARILY F OLLOW IT UP WITH PAYMENT OF TAXES AND THERE WILL BE NO NEED FOR MAKING HIM COMMIT TO PAY TAXES BY THE INCOME TAX AUTHORITY . BOTH IN THE POST SURVEY PROCEEDINGS AND SCRUTINY AS SESSMENT PROCEEDINGS DETAILED EXPLANATIONS WERE SUBMITTED BY THE APPELLANT WHICH WAS SUPPORTED BY PROPER EVIDENCES A ND DOCUMENTS TO ESTABLISH WHY THE STATEMENT MADE AT TH E TIME OF ITA 6733/M/2008 M/S. AL QURESH EXPORT 9 SURVEY IS NOT BEING ADHERED TO OR RETRACTED. THE A PPELLANT IN THE POST SURVEY PROCEEDINGS AS WELL AS ASSESSMENT PROCEEDINGS INTIMATED TO THE A.O WHAT ARE THE CORRE CT FACTS AND FILED EVIDENCES THAT SUPPORTED HIS CLAIM. THE AO WAS UNABLE TO BRING ANY MATERIAL OR EVIDENCE TO THE CON TRARY. THE SUPREME COURT IN PULLAN GODE RUBBER PRODUCE CO. LTD VS. STATE OF KERALA (1973)(91 ITR 18) HAS HELD THAT AN ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE. IT IS OPEN TO THE PERSO N WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT. IN THE PRESENT CASE APART FROM ANSWER GIVEN BY THE PARTNER SHAKIR QURESHI TO QUESTION AT S. NO.11 ON SURVEY DA Y THAT SINCE I AM NOT ABLE TO RECONCILE THE DISCREPANCY O N PURCHASE FOR WHICH BILLS WERE YET TO BE RECEIVED AS SUCH I OFFER AN INCOME OF RS 1.91 CRORES NO CLINCHING EVIDENCE OR MATERIAL BASED ON VALID INQUIRY IS PLACED ON RECORD BY THE A O WHICH COLD PERSUADE THE APPELLATE AUTHORITY TO CONFIRM TH E ADDITION SO MADE. IN CIT VS. RAMDAS MOTOR TRANSPORT {(1994)(238 ITR 177)(183)(A)} AND JAIKISAN R. AGARWAL VS. ACIT {(20 00) 66 TTJ 704} IT HAS BEEN HELD THAT IF THE ADMISSION IN T HE STATEMENT IS NOT SUPPORTED BY ANY ASSET OR DOCUMENT THE RETRACTION MAY BE GENUINE. THE ALLAHABAD HIGH COUR T IN THE CASE OF ABDUL QAYINNE VS. CIT {(1990) 184 ITR 404 ( ALL.)} MADE THE CATEGORICAL OBSERVATION TO THE EFFECT THAT AN ADMISSION OR AN ACQUIESCENCE CANNOT BE FOUNDATION F OR AN ASSESSMENT WHEN THE INCOME IS RETURNED UNDER AN ERR ONEOUS IMPRESSION OR MISCONCEPTION OF LAW. IT WAS ALWAYS OPEN TO AN ITA 6733/M/2008 M/S. AL QURESH EXPORT 10 ASSESSEE TO DEMONSTRATE ANY SATISFY THE AUTHORITY C ONCERNED THAT A PARTICULAR INCOME WAS NOT TAXABLE IN HIS HAN DS AND THAT IT WAS RETURNED UNDER AN ERRONEOUS IMPRESSION OF FACTS AND LAW. IN THE PRESENT CASE THE APPELLANT IN THE POST SURVEY PROCEEDINGS AS WELL AS CONSEQUENT PROCEEDINGS HAS A MPLY DEMONSTRATED THROUGH CREDIBLE EVIDENCE THAT ITS PUR CHASES WERE GENUINE AND SO THE STATEMENT LOSES ITS BOTTOM. TO SUM UP THERE WAS A SURVEY IN THE APPELLANTS CA SE ON 01.02.2005. SURVEYING AUTHORITY NOTICED THAT IN RE SPECT OF CERTAIN PAYMENTS (MADE BY CHEQUE) RECORDED IN THE B OOKS TOWARDS PURCHASES THE CORRESPONDING BILLS WERE NOT READILY AVAILABLE. AS SUCH AO CAM TO THE CONCLUSION THAT P URCHASES TO THE EXTENT OF RS 1 86 60 238/- TO DIFFERENT PART IES WERE BOGUS. IN THE STATEMENT RECORDED OF PARTNER SHAKIR QURESHI HE ADMITTED THAT SINCE HE IS UNABLE TO RECONCILE TH E DISCREPANCY AS SUCH HE IS OFFERING RS 1.91 CRORES A S ADDITIONAL INCOME ON THAT ACCOUNT. HOWEVER IN THE IMMEDIATE POST SURVEY PROCEEDINGS IT WAS ABLE TO PRODUCE ALL THE RELATED DOCUMENTS BEFORE THE ASSESSING AUTHORITY. AT THE A SSESSMENT STAGE TOO IT WAS DEMONSTRATED THAT THE SAID TRANSAC TIONS ARE GENUINE. THE AO HAS NOT BEEN ABLE TO CORROBORATE T HE DECLARATION WITH ANY DOCUMENT EVIDENCE OR ASSET. AS SUCH ON THE FACTS AND CIRCUMSTANCES AS WELL AS ESTABLISH ED POSITION OF LAW AS HIGHLIGHTED AFORESAID THE ADDITION OF RS 1.91 CRORES MADE ON UNCORROBORATED STATEMENT WHICH WAS LATER R ETRACTED IS DELETED. NOW THE REVENUE IS IN APPEAL AGAINST THE DELETION MADE BY THE LD. CIT (A). ITA 6733/M/2008 M/S. AL QURESH EXPORT 11 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND ALSO PERUSED THE RECORD. AS PER THE ADMITTED FACT NO I NCRIMINATING MATERIAL WAS FOUND IN THE COURSE OF THE SURVEY ACTION. THE A.O.S MAIN THRUST IS ON THE STATEMENT GIVEN BY SHRI SHQ A PARTNER OF THE ASSESSEE-FIRM. DURING THE COURSE OF SURVEY ACTION U/S.133A OF THE ACT ON 1.2.2005. IT IS ALSO ADMITTED FACT THAT THE NOTING OF THE BILLS AND VOUCHERS WERE MADE UP TO 29.1.2005 AND ONLY THE CASH BOOK WAS NOT UPDATED . ON THE PERUSAL OF THE STATEMENT RECORDED U/S.131 WHICH IS REPRODUCED BY THE A.O. IN THE ASSESSMENT ORDER GENERAL QUESTION WAS PUT TO THE P ARTNER THAT SOME OF THE VOUCHERS REFLECTING WERE NOT COORDINATED WITH T HE BILLS. IN THE QUESTION ITSELF NO DETAILS ARE GIVEN. THOUGH THE A .O. HAS RELIED ON THE DIFFERENT DECISIONS IN SAID DECISIONS SANCTITY OF T HE ADMISSIONS U/S.131(4) HAS BEEN EXAMINED. MOREOVER IN SOME OF THE CASES INCRIMINATING MATERIAL WAS FOUND. IN THE PRESENT CA SE THOUGH THE PAYMENTS WERE SHOWN BY THE ASSESSEE THE RELEVANT B ILLS COULD NOT BE FOUND WITH DATE OF THE SURVEY. SUBSEQUENTLY IN PO ST SURVEY ENQUIRIES AS PER FACTS AVAILABLE ON RECORD THE ASSESSEE PROD UCED THE RELEVANT BILLS AND THERE WAS NO FURTHER ENQUIRY. 9. IN THE CASE OF PAUL THOMAS & SONS VS. CIT 263 IT R 101 (KER) THE HONBLE HIGH COURT HAS HELD AS UNDER:- 11. THE PROVISION ALSO ENABLES THE IT AUTHORITY TO IMPOUND AND RETAIN IN HIS CUSTODY FOR SUCH PERIOD AS HE THINKS FIT ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS INSPECTED BY HIM PRO VIDED THE AUTHORITY RECORDS HIS REASONS FOR DOING SO AND ALSO SHALL NOT RETAIN THE BOOKS OF ACCOUNT FOR A PERIOD NOT EXCEED ING 15 DAYS. SEC. 133A(3)(III) ENABLES THE AUTHORITY TO R ECORD THE STATEMENT OF ANY PERSON WHICH MAY BE USEFUL FOR OR RELEVANT TO ANY PROCEEDING UNDER THE ACT. SEC. 133A HOWEVE R ENABLES THE IT AUTHORITY ONLY TO RECORD ANY STATEMENT OF AN Y PERSON ITA 6733/M/2008 M/S. AL QURESH EXPORT 12 WHICH MAY BE USEFUL BUT DOES NOT AUTHORIZE FOR TAK ING ANY SWORN IN STATEMENT. ON THE OTHER HAND WE FIND THA T SUCH A POWER TO EXAMINE A PERSON ON OATH IS SPECIFICALLY C ONFERRED ON THE AUTHORIZED OFFICER ONLY UNDER S. 132(4) OF THE IT ACT IN THE COURSE OF ANY SEARCH OR SEIZURE. THUS THE IT ACT WHENEVER IT THOUGHT FIT AND NECESSARY TO CONFER SUCH POWER TO E XAMINE A PERSON ON OATH THE SAME HAS BEEN EXPRESSLY PROVIDE D WHEREAS S. 133A DOES NOT EMPOWER ANY ITO TO EXAMINE ANY PERSON ON OATH. THUS IN CONTRA-DISTINCTION-DISTIN CTION TO THE POWER UNDER S.133A S.132(4) OF THE IT ACT ENABLES THE AUTHORIZED OFFICER TO EXAMINE A PERSON ON OATH AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH EXAMINATI ON CAN ALSO BE USED IN EVIDENCE UNDER THE IT ACT. ON THE OTHER HAND WHATEVER STATEMENT RECORDED UNDER S.133A OF THE IT ACT IS NOT GIVEN ANY EVIDENTIARY VALUE OBVIOUSLY FOR THE REASO N THAT THE OFFICER IS NOT AUTHORIZED TO ADMINISTER OATH AND TO TAKE ANY SWORN IN STATEMENT WHICH ALONE HAS THE EVIDENTIARY VALUE AS CONTEMPLATED UNDER LAW. THEREFORE THERE IS MUCH F ORCE IN THE ARGUMENT OF THE LEARNED COUNSEL FOR THE APPELLANT T HAT THE STATEMENT ELICITED DURING THE SURVEY OPERATION HAS NO EVIDENTIARY VALUE AND THE ITO WAS WELL AWARE OF THI S. 10. THE IDENTICAL VIEW HAS BEEN TAKEN BY THE CO-ORD INATE BENCHES IN THE CASE OF ASHOK MANILAL THAKKAR 279 (AT) ITR 143 (AHM.) AND IN THE CASE OF DCIT VS. PREMSONS 130 TTJ 159 (MUM). 11. IN THE CASE OF PREMSONS (SUPRA) THE ITAT MUMBA I HELD AS UNDER:- 7. THE REAL QUESTION BEFORE US IS ABOUT THE DELETI ON OF ADDITION OF RS 28.85 LAKHS WHICH WAS MADE BY THE AO ON THE GROU ND THAT THE ITA 6733/M/2008 M/S. AL QURESH EXPORT 13 ASSESSEE HAD NOT OFFERED SUCH AMOUNT IN THE RETURN OF INCOME EVEN THOUGH IT WAS ADMITTED AT THE TIME OF SURVEY FROM T HE FACTS RECORDED ABOVE IT IS CLEAR THAT THE PARTNER OF THE ASSESSEE- FIRM ACCEPTED ADDITIONAL INCOME OF RS 50 LAKHS WITH RS 21 LAKHS T OWARDS EXCESS STOCK AND RS 29 LAKHS TOWARDS ANY OTHER DISCREPANC Y. TO THE EXTENT OF THE EXCESS STOCK FOUND AT THE TIME OF SUR VEY THE AMOUNT WAS PROMPTLY OFFERED FOR TAXATION BUT THE ASSESSEE RETRACTED FROM HIS STATEMENT VIDE ITS LETTER DT. 24 TH MARCH 2003 A COPY OF WHICH IS PLACED AT P. 89 OF THE PAPER BOOK. IT HAS BEEN MEN TIONED THEREIN THAT THE SURRENDER WAS OBTAINED FORCEFULLY BY THE S URVEY TEAM. BE THAT AS IT MAY THE CRUCIAL QUESTION BEFORE US IS T O DECIDE AS TO WHETHER THE ADDITION CAN BE SUSTAINED SIMPLY ON THE BASIS OF STATEMENT RECORDED AT THE TIME OF SURVEY. THE HON BLE KERALA HIGH COURT IN PAUL MATHEWS & SONS VS. CIT (2003) 181 CTR (KER) 207: 263 ITR 101 (KER) HAS HELD THAT THE STATEMENT RECOR DED UNDER S. 133A HAS NO EVIDENTIARY VALUE. THE SAME VIEW HAS B EEN REITERATED RECENTLY BY THE HONBLE MADRAS HIGH COURT IN THE CA SE OF CIT VS. S. KHADER KHAN SON (2008 214 CTR (MAD) 589 : (2008) 30 0 ITR 157 (MAD) HOLDING THAT S. 133A DOES NOT EMPOWER ANY IT AUTHORITY TO EXAMINE ANY PERSON ON OATH AND HENCE SUCH STATEMENT CANNOT BY ITSELF BE MADE THE BASIS FOR ADDITION. THE DEPARTM ENT IS ALSO NOT OBLIVIOUS OF THE PRACTICE BY WHICH THE REVENUE AUTH ORITIES OBTAIN UNDUE CONFESSION FROM THE ASSESSEE DURING SEARCH OR SURVEY PROCEEDINGS. VIDE CBDT CIRCULAR DT. 10 TH MARCH 2003 IT HAS BEEN MADE CLEAR BY THE BOARD THAT NO ATTEMPT SHOULD BE M ADE TO OBTAIN CONFESSION AS TO THE UNDISCLOSED INCOME AND THE ADD ITION SHOULD BE MADE TO ONLY ON THE BASIS OF MATERIAL GATHERED DURI NG THE COURSE OF SEARCH AND SURVEY. GOING BY THE VERDICT OF THE TWO HONBLE HIGH COURTS AND THE POSITION REAFFIRMED BY THE CBDT THRO UGH ITS CIRCULAR IT BECOMES ABUNDANTLY CLEAR THAT NO ADDITION CAN BE MADE OR SUSTAINED SIMPLY ON THE BASIS OF STATEMENT RECORDED AT THE TIME OF ITA 6733/M/2008 M/S. AL QURESH EXPORT 14 SURVEY / SEARCH. IN ORDER TO MAKE AN ADDITION ON T HE BASIS OF SURRENDER DURING SEARCH OR SURVEY IT IS SINE QUA N ON THAT THERE SHOULD BE SOME OTHER MATERIAL TO CO-RELATE THE UNDI SCLOSED INCOME WITH SUCH STATEMENT. ADVERTING TO THE FACTS OF THE INSTANT CASE WE FIND THAT ONLY TO THE EXTENT OF RS 21.14 LAKHS THER E IS A MATERIAL TO CO-RELATE WITH THE ADMISSION REPRESENTING THE EXCE SS STOCK FOUND AT THE TIME OF SURVEY. EVIDENTLY THE SURRENDER MADE B Y THE ASSESSEE AT THE TIME OF SURVEY TO THAT EXTENT AND OFFERED FO R TAXATION IN THE RETURN OF INCOME IS IN ORDER. BUT SO FAR AS THE AM OUNT IN DISPUTE TO THE TUNE OF RS 28.85 LAKHS IS CONCERNED WE OBSERVE THAT SUCH SURRENDER WAS SPECIFICALLY MADE TOWARDS ANY OTHER DISCREPANCY. THERE IS NO MENTION IN THE ASSESSMENT ORDER OF ANY SUCH DISCREPANCY FOUND AS A RESULT OF SURVEY THROWING LI GHT ON THE UNDISCLOSED INCOME. EVEN THE LEARNED DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY MATERIAL SHOWING THE EXISTE NCE OF UNDISCLOSED INCOME EARNED BY THE ASSESSEE WHICH WAS UNEARTHED DURING THE COURSE OF SURVEY. THERE IS NOTHING ON R ECORD WHICH COULD CO-RELATE SUCH ADDITIONAL INCOME OFFERED BY THE ASS ESSEE DURING THE COURSE OF SURVEY WITH ANY OTHER DISCREPANCY. UNDER THESE CIRCUMSTANCES WE ARE OF THE CONSIDERED OPINION THAT THERE IS NO BASIS FOR SUSTAINING THE ADDITION IN QUESTION. IN THE LIGHT OF THE FOREGOING DISCUSSION WE HOLD THAT THE VIEW TAKEN B Y THE LEARNED CIT (A) IS UNIMPEACHABLE WHICH IS HEREBY UPHELD. 12. AS IN THE PRESENT CASE THE ADDITION IS SOLELY BASED ON THE STATEMENT OF THE PARTNER RECORDED DURING THE COURSE OF THE PROCEEDINGS U/S.133A WHICH IS NOT CORROBORATED BY ANY OTHER INC RIMINATING MATERIAL. IN OUR OPINION THE LD. CIT (A) HAS RIGHTLY DELETED THE ADDITION. 13. IN THE RESULT REVENUES APPEAL IS DISMISSED. ITA 6733/M/2008 M/S. AL QURESH EXPORT 15 ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 5TH FEBRUARY 2011. SD/- SD/- ( R.S. SYAL ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI DATE: 15TH FEBRUARY 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) XIX MUMBAI. 4) THE CIT 19 MUMBAI. 5) THE D.R. A BENCH MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T. MUMBAI *CHAVAN ITA 6733/M/2008 M/S. AL QURESH EXPORT 16 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 27.01.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 27.01.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER