ACIT, Ludhiana v. M/s Goyal Knitwear (P) Ltd., Ludhiana

ITA 789/CHANDI/2012 | 2008-2009
Pronouncement Date: 29-09-2016 | Result: Dismissed

Appeal Details

RSA Number 78921514 RSA 2012
Assessee PAN AABCG0964F
Bench Chandigarh
Appeal Number ITA 789/CHANDI/2012
Duration Of Justice 4 year(s) 1 month(s) 28 day(s)
Appellant ACIT, Ludhiana
Respondent M/s Goyal Knitwear (P) Ltd., Ludhiana
Appeal Type Income Tax Appeal
Pronouncement Date 29-09-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 29-09-2016
Date Of Final Hearing 30-03-2016
Next Hearing Date 30-03-2016
Assessment Year 2008-2009
Appeal Filed On 01-08-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH CHANDIGARH BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA ACCOUNTANT MEMBER ITA NO.751/CHD/2012 (ASSESSMENT YEAR : 2008-09) M/S GOYAL KNITWEARS PVT. LTD. VS. THE D.C.I.T. D-XXIX-101/8A SHERPUR CHOWK CENTRAL CIRCLE-II G.T. ROAD LUDHIANA. LUDHIANA. PAN: AABCG0964F AND ITA NO.789/CHD/2012 (ASSESSMENT YEAR : 2008-09) THE A.C.I.T. VS. M/S GOYAL KNITWEARS PVT. LTD. CENTRAL CIRCLE-II D-XXIX-101/8A SHERPUR CHOWK LUDHIANA. G.T. ROAD LUDHIANA. PAN: AABCG0964F (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI D.K. GOYAL DEPARTMENT BY : SHRI MANOJ MISHRA CIT DR DATE OF HEARING : 19.07.2016 DATE OF PRONOUNCEMENT : 29.09.2016 O R D E R PER ANNAPURNA GUPTA A.M . : BOTH THE APPEALS BY THE ASSESSEE AND THE REVENUE HAVE BEEN FILED AGAINST THE ORDER OF LEARN ED COMMISSIONER OF INCOME TAX (APPEALS)-I LUDHIANA DA TED 03.05.2012 FOR ASSESSMENT YEAR 2008-09. 2 2. THE ONLY ISSUE ARISING IN BOTH THE APPEALS RELATES TO THE ADDITION MADE OF RS.60 LACS ON ACCOU NT OF GROSS PROFIT ON DISCREPANCY IN STOCK WHICH WAS RES TRICTED IN APPEAL BY THE LEARNED CIT (APPEALS) TO THE EXTEN T OF GROSS PROFIT EARNED ON DISCREPANCY IN STOCK OF RS.43 00 000/-. WHILE THE ASSESSEE IS IN APPEAL AG AINST THE ADDITION UPHELD THE REVENUE HAS CHALLENGED THE RESTRICTION OF ADDITION. 3. BRIEF FACTS RELATING TO THE CASE ARE THAT A SUR VEY UNDER SECTION 133A OF THE INCOME TAX ACT 1961 WAS CONDUCTED IN THIS CASE ON 20.07.2007 DURING THE CO URSE OF WHICH PHYSICAL VERIFICATION OF STOCK WAS DONE INVENTORIES PREPARED AND STOCK AMOUNTING TO RS.2 07 93 541/- WAS FOUND AT THE BUSINESS PREMISES OF THE ASSESSEE. AS PER THE TRADING AND MANUFACTURING ACCOUNT SUBMITTED BY THE ASSESSEE ON THE DATE OF SU RVEY THE FIGURE OF STOCK WAS RS.8 12 22 478/-. THE DIFF ERENCE OF RS.6 04 28 927/- WAS CONFRONTED TO THE ASSESSEE DURING SURVEY PROCEEDINGS AND ALSO DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSEE EXPLAINED THE SAME VIDE ITS REPLY DATED 31.12.2009 AS BEING ON ACCOUNT OF STOCK LYING AT THE PREMISES OF ASSOCIATE CONCERNS AND FABRICATO RS AS PER THE FOLLOWING DETAILS : SUMMARY OF STOCK AS AT 20.07.07 QTY RATE AMT. RS. STOCK WITH KGHW-SERNI 28.00 3 STOCK WITH CROSS COUNTRY - FINISHED 15490 350 54.22 STOCK WITH CROSS COUNTRY-SEMI FINISHED 13620 215 29.28 STOCK WITH CROSS COUNTRY- YARN 96176 190 182.73 F ABRICATORS 268.00 GKL 250.00 TOTAL 812.23 4. THE ASSESSING OFFICER COULD NOT CONSIDER THE FACTUAL SUBMISSION OF THE ASSESSEE SINCE THE DETAIL HAD BEEN SUBMITTED ON THE LAST DAY OF FRAMING THE ASSES SMENT. HE THEREFORE PROCEEDED TO ASSESS THE TOTAL INCOME OF THE ASSESSEE COMPANY BY MAKING AN ADDITION OF RS.60 LAC S AS GP EARNED ON DISCREPANCY IN STOCK ON THE GROUND THA T THIS AMOUNT HAD BEEN SURRENDERED DURING THE COURSE OF SU RVEY BY THE DIRECTOR OF THE ASSESSEE COMPANY. 5. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LEARNED CIT (APPEALS) WHERE THE ASSESSEE MADE DETA ILED SUBMISSIONS REPRODUCED AT PARA 4 OF THE ORDER THE SUM AND SUBSTANCE OF WHICH WAS THAT MERELY ON THE BASIS OF SURRENDER MADE NO ADDITION COULD BE MADE MORE SPECIFICALLY WITHOUT POINTING ANY DISCREPANCY IN TH E STOCK INVENTORY SUBSTANTIATED WITH SUPPORTING EVIDENCES SUBMITTED BY THE ASSESSEE. THE ASSESSEE PLEADED TH AT SINCE THE ASSESSING OFFICER HAD FAILED TO CONSIDER THE SAME THE MATTER SHOULD BE REMANDED TO HIM FOR CONSIDERATION. THEREAFTER THE MATTER WAS DULY REMA NDED TO THE ASSESSING OFFICER WHO REITERATED THAT THE SU RRENDER WAS MADE VOLUNTARILY BY THE ASSESSEE WITHOUT ANY PRESSURE FROM THE DEPARTMENT AND THAT EVEN AS PER T HE 4 DETAIL OF STOCK SUBMITTED BY THE ASSESSEE THERE ST ILL REMAINED A DISCREPANCY OF RS.43 LACS IN THE STOCK L YING WITH THE ASSESSEE ON THE DATE OF SURVEY WHICH ON P HYSICAL VERIFICATION WAS FOUND TO BE RS.2 07 93 541/- WHILE AS PER THE STOCK STATEMENT SUBMITTED IT WAS SHOWN AT RS.2 50 000/-. A REJOINDER TO THE REPORT WAS SUBMI TTED BY THE ASSESSEE. THE LEARNED CIT (APPEALS) AFTER CONS IDERING ALL ASPECTS AND ARGUMENTS ON THE MATTER HELD THAT T HE ASSESSING OFFICER HAD NO BASIS TO MAKE THE ADDITION OF RS.60 LACS SOLELY ON THE BASIS OF SURRENDER MADE BY THE ASSESSEE WHEN THE ASSESSEE HAD RETRACTED THE SAME W ITH EVIDENCE WHICH HAS NOT BEEN CONTROVERTED BY THE ASSESSING OFFICER. FURTHER THE LEARNED CIT (APPEA LS) HELD THAT THE DISCREPANCY IN STOCK REMAINED UNEXPLA INED TO THE EXTENT OF RS.43 LACS AND UPHELD THE ADDITION OF GP RATE ON THE SAME. THE RELEVANT FINDINGS OF THE LEA RNED CIT (APPEALS) AT PARAS 7 TO 9 OF HIS ARE AS FOLLOWS : 7. I HAVE CONSIDERED FACTS OF THE CASE THE BASIS O F ADDITION MADE BY THE AO ARGUMENTS OF THE AR DURING ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEED INGS AND THE COMMENTS OF THE AO IN THE REMAND REPORT. TH E PERUSAL OF THE ASSESSMENT ORDER AS WELL AS THE AO'S COMMENTS IN THE REMAND REPORT MAKE IT VERY CLEAR THAT THE ADDITION HAD BEEN MADE SOLELY ON THE GROUN D THAT THE ASSESSEE HAD ADMITTED UNDISCLOSED INCOME O F RS. 60 LACS DURING THE COURSE OF SURVEY OPERATION. IT I S ALSO APPARENT THAT THE ALLEGED DISCREPANCY OF RS.6 04 28 927/- HAS BEEN EXPLAINED BY THE APPELLAN T AND THE AO HAS NOT BEEN ABLE TO BRING ON RECORD ANYTHIN G TO CONTRADICT THE CLAIM IN THIS REGARD. THE AO HAS ONL Y POINTED OUT DURING THE REMAND REPORT THAT DISCREPAN CY OF 5 RS. 43 LACS IN THE FORM OF LESS PHYSICAL STOCK AS C OMPARED TO THE STOCK AS PER BOOKS OF ACCOUNTS WERE STILL UNEXPLAINED. IT IS IMPORTANT TO APPRECIATE THAT NO INCRIMINATING DOCUMENT HAD BEEN FOUND DURING THE COURSE OF SURVEY OPERATION AND THEREFORE NOTHING IN THIS REGARD I S EITHER RECORDED IN THE ASSESSMENT ORDER OR HIGHLIGHT ED IN THE REMAND REPORT OF THE AO. THE AO HAS ONLY RECORDED I N THE REMAND REPORT THAT THERE WERE CERTAIN DISCREPANCIES IN DOCUMENTS BUT HAS NOT ELABORATED ANY OF THESE WHICH MEANS THAT THE CLAIM OF THE AO IN THIS REGARD WAS N OT FACTUAL. IT IS ESPECIALLY IMPORTANT IN THE FACE OF THE FACT THAT THE ASSESSEE COMPANY HAD RETRACTED THE DISCLOS URE MADE DURING THE COURSE OF SURVEY OPERATION BY WRITIN G LETTERS TO THE ASSISTANT DIRECTOR OF INVESTIGATION A LONGWITH COPIES TO DIT/DGIT (INV.). AND THE AO IN THE ASSESSM ENT ORDER AS WELL AS IN THE REMAND REPORT ONLY REFERS TO ASSE SSEE'S ADMISSION U/S 133A TO SUPPORT HIS CASE OF ADDITION. IT CLEARLY MEANS THAT THE DISCLOSURE WHICH HAD BEEN RETRACTED B Y THE ASSESSEE LATER ON HAS NOT BEEN INDEPENDENTLY ESTABL ISHED AS ASSESSABLE BY THE AO ON THE BASIS OF EITHER THE INCRIMINATING DOCUMENTS OR DISCREPANCY IN THE STOCK S. THE VIEW OF THE AO IS NOT TENABLE AS ANY DISCLOSURE MAD E CAN BE RETRACTED VALIDLY IF IT IS ESTABLISHED THAT THE DIS CLOSURE WAS MADE ON ACCOUNT OF MISTAKE OF FACT OR LAW. THERE AR E CATENA OF JUDGEMENTS ON RETRACTION AND THIS ISSUE IS NO MORE RES INTEGRA. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF KAILAS HDEN MANHARLAL CHOKSI VS. CIT 328 ITR 411 HAS HELD AS UND ER:- 'IT IS TRUE THAT IN NORMAL CIRCUMSTANCES THE HIGH CO URT WOULD NOT INTERFERE IN THE FINDING OF FACT ARRIVED AT BY THE AUTHORITIES IT IS HOWEVER TO BE SEEN AS TO WHETHER THE EXPLANATION TENDERED BY THE ASSESSEE WOULD BE CONSIDERED BY THE AUTHORITIES BELOW. IT IS ALSO TO BE SEEN AS TO WHETHER A N ADDITION MADE IS MERELY BASED ON THE STATEMENT RECORDED BY T HE AO UNDER SECTION 132(4) AND WHETHER ANY COGNIZANCE MAY BE TAKEN OF THE RETRACTED STATEMENT. SO FAR AS CASE ON HAND 'IS CONCERNED THE GLARING FACT REQUIRED TO BE NOTED IS THAT THE 6 STATEMENT OF THE ASSESSEE WAS RECORDED UNDER SECTIO N 132(4) AT MIDNIGHT. IN NORMAL CIRCUMSTANCES IT IS TOO MUCH TO GIVE ANY CREDIT TO THE STATEMENT RECORDED AT SUC H ODD HOURS. THE PERSON MAY NOT BE IN A POSITION TO MAKE ANY COR RECT OR CONSCIOUS DISCLOSURE IN A STATEMENT IF SUCH STATEMEN T IS RECORDED AT SUCH ODD HOURS. MOREOVER THIS STATEMEN T WAS RETRACTED AFTER TWO MONTHS. THE MAIN GRIEVANCE OF TH E AO WAS THAT THE STATEMENT WAS NOT RETRACTED IMMEDIATELY AN D IT WAS DONE AFTER TWO MONTHS. IT WAS AN AFTERTHOUGHT AND MAD E UNDER LEGAL ADVISE. HOWEVER IF SUCH RETRACTION IS TO BE VIEWED IN LIGHT OF THE EVIDENCE FURNISHED ALONG WITH THE AFF IDAVIT IT WOULD IMMEDIATELY BE CLEAR THAT THE ASSESSEE HAS GI VEN PROPER EXPLANATION FOR ALL THE ITEMS UNDER WHICH DISCLOSURE WA S SOUGHT TO BE OBTAINED FROM THE ASSESSEE.' THE HON'BLE HIGH COURT OF CHHATISGARH IN THE CASE OF ITO VS. VIJAY KUMAR KESAR 327 ITR 497 HAS HELD AS UNDER : 'CONFESSION MADE BY THE ASSESSEE DURING SURVEY PROCEEDINGS IS NOT CONCLUSIVE AND IT IS OPEN TO THE A SSESSEE TO ESTABLISH THAT THE SAME WAS NOT TRUE AND CORRECT BY FILING COGENT EVIDENCE; CIT(A) AND THE TRIBUNAL HAVING ACCEPTED THE EXPLANATION OF THE ASSESSEE FOR RETRAC TING FROM THE DISCLOSURE OF UNDISCLOSED INCOME MADE BY THE LETTER DURING THE SURVEY PROCEEDINGS AND DELETED TH E ADDITIONS MADE ON ACCOUNT OF EXCESS CASH AND STOCK BY ACCEPTING THE UPDATED BOOKS OF ACCOUNT PREPARED BY THE ASSESSEE WHICH ARE SUPPORTED BY PRIMARY EVIDENC E ON RECORD THE CONCURRENT FINDINGS OF FACT RECORDED BY THE CIT(A) AND THE TRIBUNAL CANNOT BE SAID TO BE PERVER SE' FURTHER HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF KRISHAN LAL SHIVCHAND RAI VS. C1T 88 ITR 293 HAS HELD 'IT IS AN ESTABLISHED PRINCIPLE OF LAW THAT A PARTY IS ENTITLED TO SHOW AND PROVE THAT THE ADMISSION MADE BY HIM PREVIOUSLY IS IN FACT NOT CORRECT AND TRUE. IN THE INSTANT CASE THE ASSESSEE HAD DEFINITELY ALLEGED THAT THE AM OUNTS 7 SURRENDERED -WERE NOT IN FACT HIS UNDISCLOSED INCOM E THAT THE HUNDIS IN FAVOUR OF THE CREDITORS WERE GENUINE AND THAT THE SURRENDER WAS MADE SIMPLY TO AVOID BOTHERATION. ' THE HON'BIE ITAT AMRITSAR BENCH IN THE CASE OF ITO VS. BUA DASS 97 TTJ 650 OBSERVED :- 'APART FROM CONFESSIONAL STATEMENT THERE IS NO EVI DENCE THAT THE ASSESSEE HAD INDEED MADE ANY INVESTMENT IN THE PROPERTY AND IN THE SHOPS IN THE ASSESSMENT YEAR UN DER REFERENCE. THE FACT THAT THE ASSESSEE HAD GIVEN THE STATEMENT IN A CONFUSED STATE OF MIND'IS AMPLY PROV ED BY THE ASSESSEE. THE ASSESSEE WAS INDEED IN CONFUSED S TATE OF MIND WHEN HIS STATEMENT WAS RECORDED BY THE DDIT( INV.) SUCH INCOME SURRENDERED IN THE CONFESSIONAL STATEMEN T IS NOT SUPPORTED BY ANY INDEPENDENT AND CORROBORATIVE EVIDENCE. THUS UNDER THESE CIRCUMSTANCES ADDITION COULD NOT HAVE BEEN MADE MERELY BY RELYING ON THE CONFESSIONAL STATEMENT. THE ASSESSEE HAD DEMONSTRAT ED WITH POSITIVE MATERIAL AND DOCUMENTARY EVIDENCE THA T THE STATEMENT GIVEN BEFORE THE DDIT(INV.) WAS FACTUALLY NO T CORRECT. THE DOCUMENTARY EVIDENCE PRODUCED BY THE ASSESSEE SHOWS THAT PLOT WAS PURCHASED ON 24 TH FEB. 1990 AND A COPY OF REGISTERED DEED WAS ALSO PLACED BEFOR E THE AO. TWO SHOPS HAVE BEEN CONSTRUCTED BEFORE 4 TH JULY 1991. SINCE THE INVESTMENT IN THE PLOT AND SHOPS DID NOT FALL IN THE ACCOUNTING YEAR RELEVANT TO THE ASSESSME NT YEAR 1994-95 NO ADDITION FOR THE SAME COULD HAVE BEEN M ADE UNDER SECTION 69 FOR THE YEAR UNDER REFERENCE BECAU SE THAT SECTION REFERS TO UNEXPLAINED INVESTMENT MADE IN THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDE R REFERENCE. THE HON'BLE ITAT AMRITSAR BENCH IN THE CASE OF ACIT VS. ANUP KUMAR 94 TTJ 288 OBSERVED :- IN THE ABSENCE OF ANY SUPPORTIVE MATERIAL OR EVIDENCE ADDITION COULD NOT BE MADE MERELY ON THE BASIS OF STATEMENT RECORDED UNDER SECTION 132(4) WHERE THE I NCOME 8 COMPUTED BY AO ON THE BASIS OF SEIZED DOCUMENTS AND MATERIAL IS LESS THAN THE INCOME DISCLOSED IN THE S AID STATEMENT WHICH WAS SUBSEQUENTLY RETRACTED BY THE ASSESSEE. 8. IN VIEW OF THE ABOVE DETAILED APPRECIATION OF JUDICIAL PRONOUNCEMENTS ON THE ISSUE OF RETRACTION F ROM DISCLOSURE MADE IN SEARCH/SURVEY IT BECOMES ABUNDANT LY CLEAR THAT ASSESSEE CAN RETRACT IF HE IS ABLE TO PR OVE THAT THE STATEMENT WAS MADE UNDER A MISTAKEN BELIEF OF F ACT OR LAW. THE ASSESSING OFFICER IN THE EVENT OF SUCH A VAL ID RETRACTION IS REQUIRED TO ESTABLISH AS A MATTER OF FACT AND EVIDENCE THAT THE UNDISCLOSED INCOME ASSESSED WAS E ARNED BY THE ASSESSEE AND THE SAME CAN BE DONE BY MARSHAL LING ALL THE EVIDENCE IN HIS POSSESSION EITHER ON THE BAS IS OF DOCUMENTS FOUND AND SEIZED DURING THE COURSE OF SEARC H OPERATION OR ON THE BASIS OF FURTHER INVESTIGATION CARRIED OUT. IT IS APPARENT THAT THE ASSESSEE HAVING MADE THE RETRACTION SUBMITTED DETAILED EXPLANATION IN RESPECT OF ALLEGED STOCK DISCREPANCY WHICH HAD ALSO BEEN VERI FIED BY THE AO SO AS TO DISCHARGE THE ONUS CAST UPON HIM I N THE MATTER AND THE A.O. IN THIS SCENARIO WAS DUTY BOUND TO CONSIDER THE EXPLANATION OF THE ASSESSEE AND BRING O N RECORD ANY REASONS TO DISPROVE THE CLAIM MADE BY THE ASSES SEE. THE COMMENTS OF THE A.O. CLEARLY SHOWS THAT THE AO F AILED IN HIS DUTY TO CONFRONT DOCUMENTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS HE HAS NOT BEEN ABLE TO P OINT OUT SPECIFICALLY AS TO WHEN AND IN WHAT FORM THE DOCUMENTS WERE CONFRONTED. 9. IN VIEW OF THE ABOVE DETAILED FACTS AND CIRCUMSTAN CES OF THE CASE IT IS AMPLY CLEAR THAT THE AO HAS NO BASIS TO MAKE AN ADDITION OF RS. 60 LACS APART FROM DISCLOSURE MAD E BY THE ASSESSEE U/S 133A DURING THE COURSE OF SURVEY O PERATION. IT HAS ALSO BEEN CLEARLY HIGHLIGHTED THAT THE IMPUGNED STATEMENT WAS GIVEN UNDER A MISTAKEN BELIEF OF FACT AND UNDER STRESS AND THEREFORE THIS CONFESSION BY ITSEL F WOULD NOT BE CONSIDERED AS AN EVIDENCE FOR DETERMINING THE UND ISCLOSED 9 INCOME FOR THE YEAR UNDER CONSIDERATION. NOTHING HAS B EEN BROUGHT ON RECORD EITHER BY LEADING SOME INDEPENDENT EVIDENCE BASED UPON IMPOUNDED RECORD/POST SURVEY INVESTIGATION OR BY POINTING OUT ANY INCONSISTENCY IN TH E EXPLANATION SUBMITTED BY THE ASSESSEE ON THE STOCK DISCREPANCY. AS SUCH THE ADDITION MADE BY THE AO SUFF ERS FROM SERIOUS LIMITATION IN TERMS OF LACK OF EVIDENCE EXCEPT TO THE EXTENT OF NEGATIVE STOCK OF RS.43 LACS WHICH CAN BE INTERPRETED TO MEAN THAT THE ASSESSEE HAD MADE SALE S WHICH WERE NOT RECORDED IN THE BOOKS OF ACCOUNTS. IT IS HOWEVER TO BE ACCEPTED THAT THE PURCHASES IN RESPEC T OF THE IMPUGNED UNACCOUNTED SALES ALREADY STAND RECORDED A ND THEREFORE IT WOULD BE APPROPRIATE TO MAKE AN ADDITION OF THE GP RATE IN RESPECT OF IMPUGNED SALES OF RS. 43 LAC S. AS SUCH THE ADDITION MADE BY THE AO AMOUNTING TO RS. 60 LACS I S CONFIRMED ONLY TO THE EXTENT OF THE PROFIT WORKED OU T BY APPLYING GP RATE ON UNACCOUNTED SALES OF RS. 43 LACS. 6. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE SUBMISSIONS MADE BEFORE THE LEARNED CIT (APPEALS) AND STATED THAT SINCE THE ENTIRE DIFFEREN CE IN STOCK HAD BEEN EXPLAINED THERE WAS NO REASON TO UP HOLD ANY ADDITION AT ALL. 7. THE LD.DR ON THE OTHER HAND RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND STATED THAT THE SURRENDER OF RS.60 LACS HAVING BEEN MADE VOLUNTARIL Y THERE WAS NO REASON TO RESTRICT IT. 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CI T (APPEALS) UPHOLDING THE ADDITION TO THE EXTENT OF G P ON 10 STOCK DISCREPANCY OF RS.43 LACS. THE FACT REMAINS THAT THE ADDITION OF RS.60 LACS HAD BEEN MADE SOLELY ON THE BASIS OF SURRENDER MADE BY THE ASSESSEE DURING SURV EY WHICH WAS DULY RETRACTED BY THE ASSESSEE BY SUBMITT ING AN EXPLANATION FOR THE DISCREPANCY IN STOCK DULY SUPPORTED BY EVIDENCES. NO COGENT MATERIAL HAS BEEN BROUGHT ON RECORD BY THE REVENUE EITHER TO SUBSTANT IATE THE ADDITION MADE OR TO DISLODGE THE EXPLANATION OF FERED BY THE ASSESSEE REGARDING THE DISCREPANCY IN STOCK. IN THE CIRCUMSTANCES WE FIND THE LD. CIT(A) HAS RIGHTLY HELD THAT THE ADDITION MADE SUFFERS FROM SERIOUS LIMITA TION IN TERMS OF LACK OF EVIDENCE. VARIOUS HIGH COURTS HAVE HELD THAT ADDITION CANNOT BE MADE MERELY ON THE BASIS O F SURRENDER MADE PRESENCE OF CORROBORATIVE EVIDENCE IS ESSENTIAL PARTICULARLY WHEN THE SURRENDER IS RETRAC TED. 9. IN COMMISSIONER OF INCOME TAX VS. ASHOK KUMAR JAIN (2014) 90 CCH 261 RAJHC THE HIGH COURT HELD THAT IN CASE ASSESSEE HAD NOT ADHERED TO SURRE NDER MADE DURING COURSE OF SURVEY THEN IT WAS FOR AO TO BRING ON RECORD COGENT MATERIAL AND OTHER EVIDENCES TO SU PPORT ADDITION RATHER THAN RELY ON STATEMENTS SIMPLICITOR . FURTHER FINDING OF FACTS WAS ARRIVED BY AUTHORITIES BELOW THAT FUNDS WERE ARISING FROM SAME BUSINESS AND HAD A DIRECT NEXUS AND INCOME WAS INVESTED/UTILIZED DURIN G THE YEAR UNDER CONSIDERATION. THUS TRIBUNAL WAS JUSTIFI ED IN DELETING ADDITION MADE BY AO. 11 10. IN COMMISSIONER OF INCOME TAX VS. M.P. SCRAP TRADERS (2014) 89 CCH 384 GUJHC THE ADDITION MADE BY AO ON ACCOUNT OF UNEXPLAINED INVESTMENT ON BASIS OF SOLE CONFESSIONAL STATEMENT OF PARTNER OF ASSESSEE-FIRM IN SURVEY U/S 133A IN ABSENCE OF ANY CORROBORATIVE MATERIAL WAS HELD TO BE UNSUSTAINABLE PARTICULARLY WHEN CONFESSIONAL STATEMENT WAS SUBSEQUENTLY RETRACTED. 11. AGAIN IN CIT VS. DIGAMBAR KUMAR JAIN (HUF) (2012) 83 CCH 236 MPHC RELYING ON CIT VS. MSDHINGR A METAL WORKS IN ITA NO.1111/2010 AND CIT VS. S. KHAD ER KHAN SON (2008) 300 ITR 157 (MAD) THE COURT HAS HE LD STATEMENT RECORDED UNDER S. 133A HAD NO EVIDENTIARY VALUE AND ADDITIONS COULD NOT BE MADE MERELY ON THE BASIS OF STATEMENT U/S 133A. PRESENCE OF SOME CORROBORATI NG EVIDENCE AGAINST UNDISCLOSED INCOME OF ASSESSEE WAS ESSENTIAL BEFORE MAKING ADDITION. 12. FURTHER THE DECISION OF THE MADRAS HIGH COURT IN THE CASE OF CIT VS S. KHADER KHAN SON (2008) 30 0 ITR 157 (MAD) HOLDING THAT STATEMENT RECORDED UNDER SEC TION 133A HAS NO EVIDENTIARY VALUE AND ADDITIONS CANNOT BE MADE MERELY ON THE BASIS OF SURRENDER MADE HAS BEE N UPHELD BY THE SUPREME COURT IN ITS JUDGEMENT REPORT ED AT 352 ITR 480 (SC). 13. THUS WE HOLD THAT IN VIEW OF THE VALID RETRAC TION OF SURRENDER MADE BY THE ASSESSEE IN WHICH NO 12 DISCREPANCY WAS POINTED OUT BY THE REVENUE THERE REMAINED NO BASIS FOR MAKING ANY ADDITION MERELY ON THE GROUND THAT THE ASSESSEE HAD VOLUNTARILY SURRENDED HIS INCOME. 14. FURTHER IT REMAINS THAT TO THE EXTENT OF RS.4 3 LACS THERE REMAINED AN INCONSISTENCY IN THE STOCK STATEMENT SUBMITTED BY THE ASSESSEE AS THE ACTUAL S TOCK FOUND IN THE BUSINESS PREMISES OF THE ASSESSEE ON T HE DATE OF SURVEY FELL SHORT WITH THAT DISCLOSED BY TH E ASSESSEE IN HIS STOCK STATEMENT BY THE SAME. NO EXPLANATION REGARDING THE NEGATIVE STOCK WE FIND WAS OFFERED BY THE ASSESSEE EITHER TO THE CIT (APPEALS) OR EVEN BEFORE US. IN VIEW OF THE SAME WE HOLD THAT THE LE ARNED CIT (APPEALS) HAS RIGHTLY HELD THAT THE ASSESSEE HA S SOLD STOCK OUT OF ITS BOOKS TO THIS EXTENT AND MADE AN A DDITION OF THE GP RATE IN RESPECT OF THE SAME. 15. IN THE RESULT WE UPHOLD THE ORDER OF THE LEARN ED CIT (APPEALS) AND DISMISS BOTH THE APPEALS OF THE ASSESSEE AS WELL AS REVENUE. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 29 TH SEPTEMBER 2016 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 13 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR ITAT CHANDIGARH