The order of the Bench was delivered by
Bhavnesh Saini (Judicial Member)- This appeal by the Revenue is directed against the order of the learned Commissioner of Income-tax (Appeals), Panchkula, dated December 4, 2013, for the assessment year 2009-10 challenging the deletion of addition of Rs. 90 lakhs.
2. According to the office, the Departmental appeal is time barred by 17 days. It is explained that the delay in filing of appeal was due to procedural lapses. Learned counsel for the assessee did not object to the condonation of delay. Considering the above and that learned counsel for the assessee has no objection, the nominal delay in filing the Departmental appeal is condoned.
3. Briefly the facts of the case are that the Assessing Officer noted that the assessee was in the business of purchase and sale of gold, silver and diamond jewellery besides doing labour job work of making jewellery out of gold and new jewellery. A survey operation under section 133A(1) of the Act was conducted at the business premises of the assessee on June 23, 2009. During the course of the survey operation inventories of cash, stock and the list of cheque books/pay in slips, etc., found at the business premises of the assessee were prepared. Certain incriminating documents were found, which were impounded. The statement of Sh. Vipin Aggarwal, the proprietor of the business, was recorded. From the impounded documents, the Assessing Officer noted that a letter was written by the assessee to Pearl India, New Delhi, regarding cessation of liability worth Rs. 90 lakhs which was being shown as standing by the assessee in his return. As a result of the survey operation, the assessee offered an additional income of Rs. 2.25 cores over and above his regular business income for the assessment year 2009-10 and the assessment year 2010-11 on account of discrepancy in stock and cash payment out of books and admission with respect to cessation of liability of Rs. 90 lakhs.
(i) The Assessing Officer noticed that the assessee had shown only income to the tune of Rs. 7,91,694 and had not declared the income to the tune of Rs. 90,00,000 surrendered during the course of survey proceedings relevant to the assessment year 2009-10. To confront this retraction the Assessing Officer summoned the assessee under section 131 of the Act and recorded his statement on oath. The statement has been reproduced on page 3 of the assessment order. Since the statement recorded on oath in response to the summon under section 131 of the Act by the Assessing Officer has evidentiary value and have relevance to ground, therefore, for the sake of clarity and reference, the same is reproduced as under :
"Question Please disclose your identity
Answer I am Vipin Aggarwal, S/o Late Shri Hari Kishan Dass, aged 50 years, Prop. M/s. Musaddi Lai Hari Kishan Dass, Jewellers, Kasera Bazar, Ambala Cantt.
Question During the course of survey under section 133A(1) of the Act, conducted at your business premises on June 23, 2009, you were shown a document which was the letter written by you to Sh. Gautam of Ms. Pearl India, New Delhi. As per that letter, you had accepted that you had made payment of Rs. 90,00,000 (rupees ninety lakhs only) to M/s. Pearl India, New Delhi, and as on March 23, 2009, you had no balance outstanding to the said concern and you were asked to explain whether the said payment had been reflected in your books of account or not. In response, you had replied. At present I am unable to explain the details of this transaction. I am also not able to verify the same with my books. Therefore, I offer this amount of Rs. 90,00,000 (rupees ninety lakhs only) as my additional income over and above my regular income for the assessment year 2009-10 to buy peace of mind.
Whereas in the return of income filed by you for the assessment year 2009-10, this additional income of Rs. 90,00,000 (rupees ninety lakhs only) has not been reflected. Please explain the reasons thereof.
Answer My statement was recorded during the course of survey at around 3 a.m. in the next morning. By that time I was totally exhausted and depressed. I could not make out, what statement I was giving. That said document is not in my handwriting and has never been written by me. As a matter of fact, this payment was still outstanding as on the date of survey and the actual payment thereof has duly been made at a later date by account payee cheques. Further, the actual amount outstanding to the said concern was Rs. 1,35,10,686.18.
Question During the course of survey, the document as referred to above was found from your business premises, and I am showing you the same, which was duly signed by you during the course of survey operations. If the same has not been written by you, as stated by you in the earlier reply, please intimate as to whom the said paper belongs to.
Answer I do not know as to whom does it belongs to and how I have signed it.
Sd/-
(Vipin Aggarwal)
The statement given by me as above is at my own and without any duress pressure. Further, certified that the particulars recorded/given as above are correct and true to the best of my knowledge and nothing has been concealed therein.
Sd/-
(Vipin Aggarwal)."
(ii) The statement of the assessee was not accepted by the Assessing Officer and noted that the assessee retracted from his statement while filing the return of income from the year under consideration which was filed on September 30, 2009. During the intervening period of more than three months, the assessee had in no manner oral or written intimated the Department about the genuineness of the statement given by him. Had there been any iota of confusion in the mind of the assessee about the statement given by him he could have approached the competent authority to clear his stand within a period non-questionable. The assessee retracted from his statement after three months and the manner of filing of return of income excluding the surrendered income clearly depicts that the said retraction was an afterthought.
(iii) The Assessing Officer also quoted the decisions that in the case of Bachittar Singh v. CIT [2010] 328 ITR 400 (P&H) ; [2010] 236 CTR (P&H) 587 the hon'ble Punjab and Haryana High Court held that the statement recorded during the survey is valid. The retraction of additional income on the ground that the statement was the result of duress was not accepted. Similar view was taken in the case of Dr. S. C. Gupta v. CIT [2001] 248 ITR 782 (All) ; [2001] 170 CTR (All) 421. In the case of Surinder Kumar Charanjit Kumar v. CIT [2006] 282 ITR 78 (P&H) ; [2006] 201 CTR (P&H) 37, it was held that the retraction should be at the earliest opportunity or at least within the reasonable time. In the case of Dr. S. S. Gulati v. Deputy CIT (I. T. A. No. 671 of 2009 (P&H)) it was held that where the appellant had himself surrendered the amount voluntarily, paid the taxes in advance on the surrendered amount ; the allegation of coercion and duress is base less and it is an afterthought. The statement given in a spontaneous and natural manner, cannot be ignored keeping in view the facts and circum stances of the case where there does not appear to be any reason for the appellant for retracting from the surrender, which it has already made during the survey and on which it has already paid advance tax voluntarily. Further, the assessee had signed the document and accepted the cessation of liability in his statement recorded during the course of survey proceed ings. In view of these finding, the Assessing Officer concluded that the retraction made by the assessee from the statement recorded during the survey proceedings in which the surrendered amount of Rs. 90 lakhs was involved was clearly an afterthought and, hence, unacceptable. An addition of Rs. 90 lakhs was made on account of unexplained investment under section 69 of the Act.
4. During the course of the appellate proceedings, the counsel for the assessee filed a written submission which in brief, is reproduced as under :
"The brief facts of the case are that the survey under section 133A(1) at the business premises of the appellant was conducted on June 23, 2009, which relate to the assessment year 2010-11 and the additional income of Rs. 1,35,00,000 was got declared relevant to the assessment year 2010-11. But after the conclusion of survey, the survey officer in charge discussed the same with his senior boss about survey on phone and on further instructions he directed the appellant that this additional income has to be revised at higher figure but by that time all the calculations in respect of stock and cash had already been made and there was no way out to increase the additional income. A strategy was chalked out to have additional surrender of Rs. 90 lakhs to which the assessee had shown great reluctance. It was already 3 a.m. of the next morning and the appellant was totally exhausted and depressed. To increase the surrender amount, a false piece of evidence was created to the effect that the assessee had repaid a sum of Rs. 90 lakhs to one of its creditors, M/s. Pearl India Ltd., whose credit balance as on the day of the survey was Rs. 1,35,10,686.18 brought forward from the assessment year 2009-10, i.e., year under consideration. Out of the said credit balance, the payments were made by account payee cheques in the assessment year 2010-11 and the closing balance as on March 31, 2010, as Rs. 35,10,686.18.
The letter was got written in Hindi by someone on behalf of the assessee on the day of survey, i.e., June 23, 2009, which is impounded documents No. 2 and copy of the same is enclosed. The English version of this letter is reproduced as under :
To
Sh. Gautam Ji,
Pearl India, New Delhi
According to my books for the financial year ending 31-3-2009, I had shown Rs. 90 lakhs as payable which in fact have already paid, now nothing remains payable. Please note.
Sd/-
(Vipin Aggarwal)
23-6-2009
Interpolated as 23-3-2009
This letter was impounded by the survey party and made the basis for declaration of additional income of Rs. 90 lakhs for the assessment year 2009-10 and the assessee was asked to put signatures on this newly written letter. The assessee put his signature on the day of survey mentioning date as June 23, 2009, which was date of survey. This date was got interpolated as March 23, 2009, to make it relevant for the year under consideration. This is clear from the letter reproduced above it looks utopian that the assessee's letter was dated March 23, 2009, the day coinciding with the date of survey. This date was selected to min imise the cutting in the original date June 23, 2009, to make it March 23, 2009, to support surrender. This was the abuse of authority.
The language of this letter is totally incorrect. As per this letter, it is written that as per the books for the year ending March 31, 2009, I have shown Rs. 90 lakhs as payable as on March 31, 2009, whereas as per the books of account and the balance-sheet already available on the file of the Assessing Officer, this figure was Rs. 1,35,10,686.18.
Further, in this letter, it has been got written that I have in fact already paid this amount and nothing remains payable. Kindly note. This was factually incorrect.
In this connection, the attention is drawn to the fact that this is totally contrary with the books of account, secondly, had this letter been sent to the addressee, carbon copy should have been from part of our record and not the original and for such an important communication, it could have been sent by registered post/courier and receipt thereof should have been stitched with this letter. No such evidence was available, more so this was original letter said to have been written on March 23, 2009, then why the original letter was lying in our record, no word o/c (office copy) was written on this letter, no receipt of having been sent this letter is on record, no proper address of this firm in Delhi has been written on the letter. The date on signatures had been interpolated and got repeated the same clearly reflects that this letter was engineered to enhance the survey and as such this is contrary to the spirit of section 133A of the Income-tax Act and the Board's circular on the subject. The facts mentioned in this letter are oral and do not tally with the books of account and as such the statement recorded during the course of survey about this letter was also involuntary and inaccurate obtained to justify the surrender, when the basis of evidence is unreal and created. The statement of the assessee based on this evidence is also unreal having no evidentiary value.
5. The assessee further submitted that the Assessing Officer is not authorised to record statement on oath under section 133A of the Act and if it has been done the statement recorded under section 133A of the Act has no evidentiary value. In this context, the appellant relied upon the following judgments :
(i) TDI Marketing Pvt. Ltd. v. Asst. CIT (I. T. A. No. 1069/Del/2007 (ITAT-Del)) ;
(ii) Unitex Products Ltd. v. ITO [2008] 22 SOT 429 (Mum) ;
(iii) Paul Mathews and Sons v. CIT [2003] 263 ITR 101 (Ker) ; and
(iv) CIT v. Dhingra Metal Works [2010] 328 ITR 384 (Delhi).
6. The assessee also emphasised on the statement recorded under section 133A at the time of survey and the statement recorded under section 131 on oath at the time of the assessment proceedings are different and differentiated facts in the statement given at two stages. The assessee also distinguished on the facts the case law relied on by the Assessing Officer in the assessment order. Further, the assessee relied on the judgment given by the hon'ble Supreme Court in the case of CIT v. S. Khader Khan Son [2012] 25 taxmann.com 413 ; [2013] 352 ITR 480 (SC) wherein the judgment given by the hon'ble Madras High Court in the case of CIT v. S. Khader Khan Son [2008] 300 ITR 157 (Mad) that section 133A does not empower any Income-tax Officer to examine any person on oath, so the statement recorded under section 133A has no evidentiary value and any admission made during such statement cannot be made basis of addition was upheld.
7. The submissions made by the assessee and the facts stated therein were forwarded to the Assessing Officer, vide this office letter No. 1139-40, dated December 10, 2012, to verify from the books of account/assessment record/survey record of the assessee vis-a-vis the creditor, M/s. Pearl India Ltd., and submit a report. Simultaneously, a letter No. 1148-49, dated December 11, 2012, was also issued to Pearl India Ltd. (PACL Ltd.), New Delhi, seeking information under section 133(6) of the Act in the assessee's case asking copy of account of the assessee as per the books of Pearl India Ltd. as on March 31, 2009, and March 31, 2010. In response a reply from PACL Ltd. dated January 17, 2013, was received with copies of statement of account of the assessee enclosed as on March 31, 2009, and March 31, 2010. The statement of account showed opening and closing balances as on March 31, 2009, and March 31, 2010. Thereafter, a summon under section 131 of the Act, dated March 15, 2013, was issued to Pearl India Ltd., New Delhi, requiring the ledger for the assessment years 2009-10 and 2010-11 and the audited balance-sheet for the assessment years 2009-10 and 2010-11. In response to the notice under section 131 of the Act, PACL Ltd. replied and enclosed the audited balance-sheet for the assessment years 2009-10 and 2010-11. The informations received in response to notices under section 133(6) and under section 131 of the Act, the same were again forwarded to the Assessing Officer, vide this office letter No. 67, dated April 9, 2013, to verify the facts from the books of account/assessment record and the balance-sheet of Pearl India Ltd., New Delhi.
(i) A report was called from the Assessing Officer on the written submission filed by the assessee and information received from Pearl India Ltd., vide this office letters dated December 10, 2012, and April 9, 2013, respectively. The Assessing Officer submitted a report dated June 10, 2013, the relevant points brought in the report are as under :
1) As regards, the false piece of evidence and cutting on the date, it is submitted that this is not the surrender letter but the letter dated March 23, 2009, written by the assessee, Sh. Vipin Aggarwal to Sh. Gautam Ji, Pearl India, New Delhi, regarding the cessation of liability worth Rs. 90 lakhs of Gautam's company. On this letter Sh. Vipin Aggarwal had signed and cutting of date from June 23, 2009, to March 23, 2009, on which the assessee, Sh. Vipin Aggarwal signed. The contention of the assessee that he was exhausted at 3 a.m. when his statement was recorded is also not worth appreciating because the assessee and his counsel, Sh. V. K. Jain, put their signature after reading the letter addressed to Sh. Gautam Ji, C/o M/s. Pearl India Ltd., Delhi. Further, the time of recording the statement during the course of survey is not mentioned in the survey report.
2) Further, the assessee's contention that the date was changed from June 23, 2009, to March 23, 2009, is also not hold good when the assessee put his signature on the cutting of date. He himself has corrected the date and the same was again corrected by putting the correct date, i.e., March 23, 2009. It is an afterthought story made by the assessee just to retract the surrender amount. He has also given bifurcation of head-wise surrender amount of each assessment year.
3) On examination of the information submitted by Pearl India Ltd., vide letter dated May 6, 2013, it has been observed that the assessee has made the payment of Rs. 1,00,00,000 through account payee cheques of different dates to M/s. Pearl India Ltd. (PACL India Ltd.), New Delhi. The amount of Rs. 1,00,00,000 is also reflected in the books of account of the assessee-company maintained with Union Bank of India, Delhi.
4) Pearl India Ltd., vide its letter dated May 31, 2013, has informed that the amount outstanding against M/s. Mussadi Lai Hari Kishan Dass Jewellers, Kasera Bazar, Ambala Cantt., shown in the loans and advances in the balance-sheet. The company has shown loans and advances at Rs. 16,64,69,11,284 as on March 31, 2009.
(ii) The Assessing Officer concluded that the assessee-company has given advances for purchase of land to M/s. Mussadi Lai Hari Kishan Dass Jewellers, Ambala Cantt. All the documents submitted by the assessee appears to be manipulated and, hence, not worth considering. The company Pearl India Ltd. has given the accommodation entries to the assessee-appellant just to cover up the transactions. In view of the facts, it is requested that the matter may be decided on the merits.
8. The report of the Assessing Officer was supplied to the assessee to furnish its comments. The salient points brought in by the assessee on the Assessing Officer's report are as under :
1) No such letter existed in our records till the time of survey. It was only created during the course of survey proceedings to extract more surrender. The following circumstances prove the fact-
(a) This letter has been got addressed to a person of the rank of clerk which is never possible as such an important communication could only be made to the managing director or any important person in a limited company. This should have been properly addressed.
(b) The contents of this letter are totally incorrect :
(i) It has been said that the said letter was written by the appellant on March 23, 2009. There could be very remote coincidence that this date could be March 23, 2009, would match with the date of survey, i.e., June 23, 2009. The theory of probability says that the chances of matching March 23, 2009, with June 23, 2009, could only be 1/365.
(ii) The language of the letter is totally incorrect and contradictory to the facts of the case. This letter says that as per my books of account for the year ended March 31, 2009, the appellant shown the company's credit as Rs. 90 lakhs, how could a person who is writing a letter on March 23, 2009, can say that this amount payable for the year ended March 31, 2009, which was not closed by then. The tense used in the letter depicts that this was got written after close of the year March 31, 2009, i.e., the date of survey on June 23, 2009.
(iii) As per our books of account, the opening balance of the company was Rs. 1,35,10,686.18 and whereas this letter says that as per my books of account for the year ended March 31, 2009, the amount payable was Rs. 90 lakhs.
(iv) This letter says that I had already given this amount and nothing remains payable. This does not match with the books of account and there is no trace from where the figure of Rs. 90 lakhs has been imported, clearly established that this is assumed figure only for the purpose of survey.
(v) This was the original hand written paper, had it been sent to the addressee it should have been a carbon copy with the postal receipt attached on it as this was an important communication.
(vi) This was not accompanied by any corroborated evidence from other side, i.e., a printed or at least hand written receipt sent by the addressee.
(vii) The document was not in the handwriting of the assessee as deposed by him in his duly sworn statement under section 131 during the course of the assessment proceedings.
2. The Assessing Officer in its remand report has admitted that there is a cutting in the date and that the appellant has corrected the date by overwriting and has repeated that date. In the ordinary course of action, no one repeats the dates after correcting the original dates as it is an only official way of certifying the dates. This clearly conveys that this was dictated by some official and written by an officer.
3. The Assessing Officer has not contradicted that the statement was recorded at 3 a.m. of the next morning but in a way have confirmed the same. The Assessing Officer has confirmed "all the communications with M/s. Pearl India Ltd. in which they have confirmed to have received payment at a later stage".
4. The Assessing Officer has not given any reason or any finding that how all the documents submitted by the assessee appear to be manipulated and how a limited company worth Rs. 14,000 crores showing the net profit of Rs. 70,87,26,275 could give accommodation entries to the appellant to cover up the transactions.
(i) The assessee also referred to the Central Board of Direct Taxes Instruction F. No. 286/2/2003 IT (Inv. II), dated March 10, 2003, on the subject "confession of additional income during the course ofsearch and seizure and survey operation" wherein the Central Board of Direct Taxes has instructed as under :
"While recording the statement during the course of search and seizure and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely."
The surveying officer has acted in complete disregard to the Central Board of Direct Taxes Instructions. If the surveying team had really collected some evidence it should have been left to be appreciated at the time of assessment and not to enforce extra surrender. The evidence collected by the Commissioner of Income-tax (Appeals) by way of inquiry and also collected by the Assessing Officer during the remand proceeding supports the contention of the assessee that the amount of Rs. 1,35,10,686.18 was still outstanding on the date of survey and was paid later on. The appellant also relied upon the decisions of the Income-tax Appellate Tribunal, Chandigarh Bench, in the case of Naresh Kumar Verma v. Asst. CIT [2013] 32 taxmann.com 280 (Chandigarh-Trib) and the Income-tax Appellate Tribunal-Delhi Bench in the case of Mahesh Ohri v. Asst. CIT [2013] 23 ITR (Trib) 522 (Delhi).
(ii) In the assessment order, the Assessing Officer has relied on a few judicial pronouncements on which the assessee has submitted that the facts of the case are distinguishable and not applicable to the assessee's case. In the case of Bachittar Singh v. CIT (supra), the hon'ble Punjab and Haryana High Court held that even if the statement under section 133A was not at par with the statement under section 132(4) and did not have that evidentiary value, such statement cannot be held to be irrelevant material so as to be ruled out of consideration in totality of facts, particularly in the absence of regular books of account. The assessee failed to produce the books of account or any other authentic contemporaneous evidence of agricultural income. In the present case, the above decision of the Punjab and Haryana High Court is not applicable as the assessee is maintaining regular books of account and were produced before the Assessing Officer. In the case of Surinder Kumar Charanjit Kumar v. CIT (supra) nowhere it has been observed that retraction should be at the earliest opportunity or at least within a reasonable time. Rather in this case, the Commissioner of Income-tax (Appeals) deleted the addition of Rs. 2,94,632 on account of low gross profit and the Tribunal restored the said addition on account of low gross profit and the High Court of the Punjab and Haryana has declined to entertain the appeal. As regards the case of Dr. S. S. Gulati v. Deputy CIT (supra), the facts of this case too are totally different to the facts of the appellant case and, hence, this judgment too as relied upon by the Assessing Officer does not supports the case of the Assessing Officer.
9. The learned Commissioner of Income-tax (Appeals) considering the submissions of the parties, remand report and material on record deleted the entire addition. His findings in paragraphs 5.11 to 5.18 of the appellate order are reproduced as under :
"5.11 I have gone through the facts of the case, the written submission filed by the appellant, remand report of the Assessing Officer and the rejoinder filed by the appellant. It is gathered that the Assessing Officer has made addition of Rs. 90 lakhs on account of additional surrender during the course of survey on June 23, 2009. This surrender was on the basis of document impounded during the course of survey where the appellant, Sh. Vipin Aggarwal, wrote a letter to Shri Gautam Ji, Pearl India, New Delhi, that according to his books for the financial year ending March 31, 2009. He had shown Rs. 90 lakhs as payable which in fact he had already paid and nothing remains payable. The document was signed by Sh. Vipin Aggarwal and the date was mentioned as June 26, 2009, corrected as March 23, 2009. The appellant did not offer Rs. 90 lakhs for taxation in its return filed for the assessment year 2009-10 on September 30, 2009. During the course of the assessment proceedings, the Assessing Officer again recorded the statement on oath by issuing summon under section 131 of the Act where Shri Vipin Aggarwal stated that he was totally exhausted and depressed and he could not make out what statement he was giving. The document was not in his handwriting and has never written by him. He also stated that the actual amount outstanding to the said concern was Rs. 1,35,10,686.18. In response to the second query when the Assessing Officer questioned referring to the document that the same was written by you please intimated as to whom the said paper belongs to. Sh. Vipin Aggarwal replied that he does not know as to whom it belongs to and how he has signed it. This statement was not accepted by the Assessing Officer and the Assessing Officer noted that the appellant has not intimated the Department about the genuineness of the statement given by him between the period of date of survey till the date of filing of the return. The assessee's retraction from his statement after three months was an afterthought. The Assessing Officer further relied on the decisions of the High Courts and concluded that the retraction made by the assessee from the statement recorded during the survey proceedings in which the surrendered amount of Rs. 90 lakhs was involved was clearly an afterthought and acceptable. The Assessing Officer made the addition of Rs. 90 lakhs on account of unexplained investment under section 69 of the Act.
5.12 During the appellate proceedings, the appellant submitted that the document was fabricated, did not belong to the appellant and the statement given on the basis of the query raised on document was given under stress and duress. The appellant submitted that as per the language of the letter the contents are factually incorrect as the letter shows the payable amount of Rs. 90 lakhs for the year ending March 31, 2009, whereas as per the books of account and the balance- sheet was Rs. 1,35,10,686.18. The appellant has further brought the facts that the content of the letter showing the year ending March 31, 2009, cannot be written on March 23, 2009, which is prior to March 31, 2009, moreover, if such letter was written by the appellant the original copy would not remain in his office rather the appellant would keep carbon copy. No evidence of dispatch of such letter was available. No receipt of having been sent this letter was available on record, no proper address of the company in Delhi was written on the letter. That date on signature had been interpolated and got repeated in such a manner which clearly reflects that this letter was engineered to enhance the surrendered amount. The date of the letter below the signature was written as June 23, 2009, which after correction was written as March 23, 2009. Since the complete date was not changed so the date of survey was corrected in such a manner to give it another month with least cutting and which would pertain to the assessment year 2009-10. The appellant further relied on the Central Board of Direct Taxes circular and judicial pronouncements wherein the hon'ble courts held that the Assessing Officer is not authorised to record statement on oath under section 133A and if such statement has been recorded under section 133A of the Act, it has no evidentiary value. The appellant further emphasised that the statement recorded on oath under section 131 at the time of the assessment proceedings was not considered. The appellant also relied on the decision of the hon'ble Supreme Court in the case of CIT v. S. Khader Khan Son (supra).
5.13 At the appellate proceedings stage, the information under section 133(6) and under section 131 were sought by my predecessor and such information gathered in the form of copies of statement of account of the appellant as on March 31, 2009, and March 31, 2010, and the audited balance-sheet of Pearl India Ltd., New Delhi, for the assessment years 2009-10 and 2010-11 was forwarded to the Assessing Officer to verify the facts from the books of account, assessment record and the balance-sheet of Pearl India Ltd. The appellant's submission was also forwarded to the Assessing Officer for its report. The Assessing Officer on its examination has not accepted that the document was a false piece of evidence. The Assessing Officer in the remand report have also not denied on the opening and the closing balances as shown in the books of account. The Assessing Officer concluded that the company, Pearl India Ltd., has given the accommodation entry to the appellant to cover up of the transaction and submitted that in view of the facts of the case the matter may be decided on the merits. The appellant in its rejoinder again reiterated that no such letter existed in his record till the time of survey. It was only created during the course of survey to extract more surrender. The appellant denied the content of the letter as totally incorrect as submitted in paragraph 5.8 (ante).
5.14 After consideration of the rival submissions and on a perusal of the document in question, it is noted that the date has been corrected by overwriting and the date has been repeated below on the letter. The letter is not written on any letter head of the appellant nor properly addressed. The date of survey was June 23, 2009, and corrected date was March 23, 2009, which cannot be said to be a mere coincidence. The content of the letter says for the year ended March 31, 2009, whereas the letter after correction is supposed to be signed on March 23, 2009. The language of the letter depicts that such language can be only after the close of the year, i.e., March 31, 2009. Further, the amount payable in the letter is shown to be Rs. 90 lakhs whereas as per the appellant's books of account the opening balance was Rs. 1,35,10,686.18. The accounts for the subsequent period also shows that the appellant has made payment on various dates by account payee cheques and the closing balance as on March 31, 2010, was Rs. 35,10,686.18. So, if the appellant has made payment prior to that the question of making payment on subsequent dates by account payee cheques does not arise. The information gathered directly from Pearl India Ltd., New Delhi, through notices under section 133(6) and section 131 shows that there were running accounts with the appel lant and Pearl India Ltd. has shown in its account the payments received on the subsequent dates. The appellant's submission is also considerable that in such situation the original handwritten paper would not remain in the appellant's office rather there could have been a copy and acknowledgment receipt. These facts support the contention of the appellant that the document in question does not belong to the appellant.
5.15 Regarding the statement recorded during the course of survey as well as during the course of the assessment proceedings, it is noted on examination of statement recorded at the time of survey that it shows there was a break in recording the statement, signature of the appellant were taken and, thereafter, the recording of statement was continued on question pertaining to the document regarding the cessation of liability. In answer to the query in the statement recorded at the time of survey the appellant had replied that at present he was unable to explain the details of transactions, he was also not able to verify the same with his books and, therefore, he offered the amount of Rs. 90 lakhs as his additional income over and above his regular income for the assessment year 2009-10 to buy peace of mind. This shows that the document in question was not verified with the books of account. There was no finding of the survey team about the balances as per the books of account. The statement of the appellant showing that he wants to offer income to buy peace of mind shows his status of mind at the time of recording of his statement. The Assessing Officer has again recorded statement on oath under section 131 during the assessment proceeding and the Assessing Officer has not been able to deny or rebut the stand taken by the appellant in his statement by bringing any other fact or discrepancy. Further, the Assessing Officer has neither made any inquiry nor has given any finding about any discrepancy noted by him on the basis of the books of account or any inquiry made with Pearl India Ltd. Rather, the inquiry conducted at the appellate stage shows that the appellant had running account and there exists, opening and closing balances in the account as per the books of account of Pearl India Ltd.
5.16 It is worthwhile to quote the circular issued by the Central Board of Direct Taxes dated March 10, 2003, which reads as follows :
'Instances have come to the notice of the Board where the assessee have claimed that they have been forced to confess the undisclosed income during the course of the search and seizure and survey operations. Such confessions, if not based upon the credible evidence, are later retracted by the concerned assessees while filing the returns of income. In these circumstances, on confessions during the course of search and seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income-tax Department. Similarly, while recording the statement during the course ofsearch and seizure and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of the pending assessment proceedings also, the Assessing Officer should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders.'
Even the Central Board of Direct Taxes has taken cognizance of such instances which compel to issue the advisory circular that while recording the statement during the course of search and seizure and survey operations no attempt should be made to be obtained confession to the undisclosed income.
5.17 In the decision given in the case of Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 (SC), the hon'ble Supreme Court held that an admission is extremely an important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect. In a recent judgment in the case of CIT v. S. Khader Khan Son [2013] 352 ITR 480 (SC), the hon'ble Supreme Court upheld the finding of the Madras High Court that section 133A does not empower any Income-tax Officer to examine any person on oath, so the statement recorded under section 133A has no evidentiary value and any admission made during such statement cannot be made basis of the addition. The word 'may' used in section 133A(3)(iii) makes it clear that the material collected and the statement recorded during the survey under section 133A are not conclusive piece of evidence by themselves. The statement obtained under section 133A would not automatically bind upon the assessee.
5.18 In view of the discussion in the above paragraphs and the judicial pronouncements of the hon'ble Supreme Court, I am of the view that the addition of Rs. 90 lakhs made on the basis of the questionable document and the statement recorded during the course of survey under section 133A at the premises of the appellant which has not been corroborated with any further finding or any other evidence from the third party is not justified. Hence, the addition of Rs. 90 lakhs is deleted. This ground of appeal is allowed."
10. The learned Departmental representative relied upon the order of the Assessing Officer and submitted that statement of the assessee was recorded during the course of the survey in the presence of his counsel. Therefore, it could not be said that the statement of the assessee recorded during the course of survey was recorded under pressure. He has relied upon the decision of the hon'ble Punjab and Haryana High Court in the case of Bachittar Singh v. CIT [2010] 328 ITR 400 (P&H) and submitted that since the assessee retracted from the statement around three months, therefore, retraction was not valid.
(i) On the other hand, learned counsel for the assessee reiterated the submissions made before the authorities below and referred to various documents from the paper book to show that the seized paper book page 82 was fabricated and did not lead to any payment of Rs. 90 lakhs. He has submitted that seized paper is not corroborated by any evidence because M/s. PACL Ltd. has shown the amount outstanding in their books of account and later on, payments have been received by them through cheques. This information is verified by the Assessing Officer in the remand proceedings. Copies of the balance-sheet of the assessee and M/s. PACL Ltd. have been brought on record to justify the findings of the learned Commissioner of Income-tax (Appeals). During the course of survey, statement of the assessee could not be recorded. Since the assessee proved that the seized paper was incorrect, therefore, the retraction from the statement was justified and relied upon the order of the Income-tax Appellate Tribunal, Chandigarh Bench, in the case of Sanjeev Kumar v. ITO [2014] 31 ITR (Trib) 680 (Chandigarh).
11. We have considered the rival submissions and perused the material on record. The copy of the seized paper is filed at page 82 of the paper book. The learned Commissioner of Income-tax (Appeals) correctly noted that date has been corrected in the same by over writing the date, has been repeated below on the letter. The date of survey was June 23, 2009, and corrected date was March 23, 2009, which could not be said to be mere coincidence. The contents of the seized paper say that "for the year ending March 31, 2009", whereas the letter after correction is supposed to be signed on March 23, 2009. The language of the letter shows that such language could only be written only after the close of the year, i.e., March 31, 2009. The findings of fact recorded by the learned Commissioner of Income-tax (Appeals) are correct and based on proper appreciation of the seized paper. If a person is writing such a letter on March 23, 2009, he cannot anticipate what would be due on later date on March 31, 2009. Further, the amount payable as per the seized paper was shown at Rs. 90 lakhs whereas as per the assessee's books of account (paper book 8 sundry creditors) as per the books of account of the assessee, the balance was Rs. 1.35 crores. The accounts for subsequent period also show that the assessee has made payment on various dates by account payee cheques and the closing balance as on March 31, 2010, was Rs. 35,10,686. So, if the assessee has made payments prior to that, the question of making subsequent payment by account payee cheque would not arise. Paper book page 32 is ledger account of M/s. PACL Ltd. showing payments of Rs. 1 crore on different dates through banking channel, copy of the bank account of the assessee as well as copy of bank account of M/s. PACL Ltd. filed on record also support the explanation of the assessee. The Assessing Officer also obtained information directly from M/s. PACL Ltd., New Delhi, through notices under sections 133(6) and 131 which shows that there were running accounts with the assessee and M/s. PACL Ltd. has shown in its account the payment received on subsequent dates. The learned Commissioner of Income-tax (Appeals) also noted that there is a considerable force in the submission of the assessee because when original seized paper (paper book page 82) is written, how the same remained in the office of the assessee because it should have reached M/s. PACL Ltd. but recovery of the original shows that no payments have been made by the assessee as alleged in the seized paper. The learned Commissioner of Income-tax (Appeals) also noted that there is a break in the recording of the statement on the date of the survey and the assessee was not able to explain the details of the transactions. This shows that the document in question was not verified from the books of account of the assessee. There was also no finding of the survey team about the balances as per the books of account of the assessee. The learned Commissioner of Income-tax (Appeals), therefore, rightly considered the Board's circular that in such a situation, the confessional statement should not be obtained because it should be based on credible evidences.
12. The hon'ble Punjab and Haryana High Court in the case of Krishan Lal Shiv Chand Rai v. CIT [1973] 88 ITR 293 (P&H) held that "it is an established principle of law that a party is entitled to show and prove that an admission made by him was in fact not correct and true". The hon'ble Supreme Court in the case of Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 (SC) held that "the assessee should be given opportunity to show that the admission is incorrect or does not show the correct state of facts". The Income-tax Appellate Tribunal, Chandigarh Bench in the case of Sanjeev Kumar v. ITO (supra) held as under (headnote) :
"Held, allowing the appeal, that the addition was made without proper evidence and merely on the basis of a statement recorded during the survey, which could not be sustained. No proper enquiry was conducted. Therefore, the addition made was to be deleted."
13. Considering the facts of the case in the light of the above discussion, it is clear that the seized paper (paper book page 82) is not reliable, did not show the correct state of affairs and the same is not corroborated by any independent evidence. There is interpolation of the date in the same and the language contained therein clearly show that the letter is not disclosing the correct facts. It is also not explained why the original letter remained with the assessee and how the payment of Rs. 90 lakhs have been verified. M/s. PACL Ltd. did not confirm alleged payment. Therefore, the assessee had a justification to retract from the earlier statement making surrender of Rs. 90 lakhs. The assessee, has been able to show that the retraction from the earlier statement was justified and based on the facts and material on record. The learned Commissioner of Income-tax (Appeals), on proper appreciation of facts and material on record, correctly deleted the addition. The decision relied upon by the learned Departmental representative would not support the case of the Revenue because of the facts and circumstances as considered above. We, therefore, do not find any error in the order of the learned Commissioner of Income-tax (Appeals) in deleting the addition.
14. In the result, the Departmental's appeal fails and is dismissed.
15. The order pronounced in the open court.