M/S Shree Supari And Spices Pvt. ... vs The Commissioner Of Income Tax And ...
2017 Latest Caselaw 5470 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

                                                                 A.F.R.
 
Reserved on: 05.10.2017
 
                         Delivered on:13.10.2017 
 
Court No. - 4
 

 
Case :- INCOME TAX APPEAL No. - 800 of 2012
 

 
Appellant :- M/S Shree Supari And Spices Pvt. Ltd.
 
Respondent :- The Commissioner Of Income Tax And Another
 
Counsel for Appellant :- Suyash Agarwal
 
Counsel for Respondent :- C.S.C., I.T., Gaurav Mahajan, Shambhu Chopra
 

 
Hon'ble Abhinava Upadhya, J.

Hon'ble Ashok Kumar, J.

(Delivered by Hon'ble Ashok Kumar, J.)

1. The present appeal has been preferred by the assessee against the order of the Income Tax Appellate Tribunal, Agra Bench Agra in ITA No.81/Agra/2011 assessment year 2006-07 dated 31.08.2012, raising following substantial questions of law.

I. Whether on the facts and circumstances of the case the ITAT was right in sustaining addition of Rs.5,00,000/- solely on the basis of statement recorded at the time of survey and without any other material to correlate the undisclosed income with such surrender; ignoring the CBDT instruction wherein the investigating authorities were directed to desist from the practice of obtaining confessional statements during Survey/Search and laid emphasis on collection of evidences relating to undisclosed incomes of the assessee ?

II. Whether the ITAT was correct in not considering that the function of the Assessing Officer is not only of an adjudicator but also an investigator; it is duty of the A.O. to ascertain the truth of the facts stated in the return/statement made, when the circumstances of the case are such to provoke inquiry, whereas in the present case the A.O. has framed assessment on the basis of statement without making any investigation ?

III. Whether the ITAT rightly not considered the contradistinction in the powers provided under Section 133A and section 132(4) of the Act as contemplated under law?

2. The brief facts of the case are that the appellant is a private limited company incorporated under Indian Companies Act, 1956. The appellant deals in business which was commenced with effect from February, 2006 and was terminated in April, 2007. For the first period the appellant company has filed the return of income declaring total income of Rs.30,690/- on 10.11.2006

3. The case of the appellant was selected for scrutiny under Section 143(2) of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') on 01.11.2007 and during the pendency of scrutiny proceedings survey under Section 133A of the Act was conducted by the Assistant Director of Income Tax (Investigation). The survey has been conducted at the business premises of the appellant on 30.01.2008 where the books of account, documents and computer etc. of the appellant company were impounded by the surveying team.

4. During the course of the said survey held on 30.01.2008, the statement of the Director namely Neeraj Maheshwari was recorded on oath in which he has surrendered a sum of Rs.5,00,000/- as undisclosed income on account of commission. The assessing authority has proceeded and initiated the assessment proceeding. The due notice has been issued to the assessee of which the assessee did not offer any reply. During the course of the assessment proceeding the assessing officer noticed that the appellant did not offer undisclosed amount of Rs.5,00,000/- in the return of income filed by the assessee, and therefore, assessing officer has made an addition of Rs.5,00,000/- vide assessment order dated 29.12.2008. In paragraph 2 of the assessment order, the assessing authority narrated the detail of the proceedings after issuance of notice under Section 143(2) of the Act. The contents of paragraph no.2 of the assessment order are quoted hereinbelow as the same are relevant;

"2. Notice u/s 143(2) of the I.T. Act, 1961 dated 01.11.2007 issued and served on 15.11.2007 fixing the date for hearing on 19.11.2007. In this case notice u/s 143(2) was also sent through registered post fixing the date for 15.11.2007. On 15.11.2007 Sri K.L. Goyal, C.A. attended and requested for adjournment. Case was adjourned to 26.12.2007. On 26.12.2007, Shri K.L. Goyal C.A. attended and filed written reply which is placed on file. He has not produced A/c books. He was required to produce A/c books and purchase a sale bills. He was also require to furnish copies of confirmed copy of A/c and bank statements as well as copy of A/c bank statements as per assessee's books. Case was adjourned to 28.12.2007. On 28.12.2007 no compliance was made. On 14.01.2008, Shri K.L. Goyal, C.A. attended and filed written reply which is placed on file. He produced cash book, ledger, journal, sale book, purchase bill when have been text checked. Case partly examined and deferred on 14.01.2008 notices u/s 133(6) were issued to M/s Sharda Trading Co. to Shri Padam Supari Traders, on 29.08.2008, notice u/s 142(1) along with questionnaire were issued fixing the date for 05.09.2008. On 05.09.2008 no compliance was made. However, on 06.10.2008 Srhi K.L. Goyal, C.A. attended and requested for adjournment. Case was adjourned to 13.10.2008. On 13.10.2008 Shri K.L. Goyal, C.A. attended and requested for adjournment. Case was adjourned to 20.10.2008. On 20.10.2008, no compliance was made. On 19.12.2008 Shri K.L. Goyal, C.A. attended . He is required to explain as to why a sum of Rs. 5,00,000/- surrender in the case of aforesaid company during the course of survey u/s 133A on 30.01.2008 may not be added in the income of the company for the A.Y. 2006-07. Case was adjourned to 27.12.2008. On 27.12.2008, Shri K.L. Goyal, C.A. attended and filed written reply to the query raised vide order sheet entry dated 26.12.2008 alongwith an affidavit of Shri Neeraj Kumar Maheshwari, Director with CD-03 A/c books for the Assessment Year 2006-07, which are placed on file.

5. Aggrieved by the order of the assessment, the appellant assessee filed an appeal before the Commissioner of Income Tax (Appeal) II, Agra. The Commissioner of Income Tax (Appeal) has affirmed the assessment order and has dismissed the appeal vide order dated 17.01.2011.

6. Aggrieved by the order passed by the CIT(A), the assessee filed an appeal before the Income Tax Appellate Tribunal, Agra Bench, Agra which has been registered as Income Tax Appeal No.81/Agra/2011. The appeal filed by the assessee has been heard by the Tribunal and after hearing the representative of the parties and perusal of the record, the appeal has been dismissed by the Tribunal vide order dated 31.08.2012.

7. During the course of hearing of the appeal, the Tribunal has directed the assessing authority to produce the survey folder. A copy of the said survey folder has been produced before the Tribunal and after due examination of the documents the tribunal has noticed that the contention of the assessee was not correct as so claimed that at the time of survey the assessee was forced to surrender the said amount. The Tribunal has also considered the instruction which has been relied by the assessee, which provides the restrictions given to the revenue authorities that while recording the statement during the course of search, seizure and survey operation no attempt should be made to obtain confession as to the undisclosed income.

8. The Income Tax Appellate Tribunal has elaborately examined the survey folder and thereafter a detailed discussion is made by the ITAT in paragraph 6 of the impugned order, which is quoted hereinbelow;

"6. On perusal of survey folder, we notice that there is Annexure-A which contains inventory of books found during the course of survey, copy of statement of Shri Puneet Kumar Jain, copy of statement of one witness Shri Varun Maheswari. A copy of statement of Shri Neeraj Kumar Maheswari is also available in the survey folder. Other certain papers relating to summary of disclosure made at the time of survey in the case of different assessees is also placed. A copy of report of reasons for impounding books of account dated 30.01.2008 to A.D.I.(Inv), Agra has also been placed. A copy of survey report dated 12.06.2008 in the case of Maheshwari Group, Agra given by the Assistant Director of Income Tax (Inv) Unit-2, Agra to the Addl. Director of Income Tax(Inv.), Agra has been placed at Sl.No.17, 18 & 19 of the Survey Folder given by the ld D.R. For the purpose of ready reference the said report is reproduced as under:-

Office of the

Asstt. Director of Income-tax(Inv.)

Agra

dated 12.06.2008

To,

The Addl Director of Income Tax (Inv),

Agra.

Madam,

Sub: Survey report in the cases of Maheshwari Group, Agra Reg;-

**********************.

Kindly refer to the above.

A search & seizure operation u/s 132 was carried out on 30.01.2008 at Agra in Keshwani group of cases, engaged in manufacture of Gutkha with branded name commonly known as 'Shankar Gutkha'. Simultaneously, some related raw-material suppliers were also got surveyed under the provisions of section 133A of the Act. In that process, survey operations were carried out on the following business premises of Maheshwari Group:

1. M/s Maya Commodity Centre, M/s BRG Company, and M/s Shree Supari Spice (P) Ltd. Tiwari Gali, Rawatpara, Agra.

2. M/s Maya Trading Company, Tiwari Gali, Rawatpra, Agra

3. Godown of Maya Trading Company (Ground Floor) at S.R. Market, Daresi No.2, Agra

4. Shop at Chitti Khana, Rawatpara, Agra

During survey proceedings, the statements on oath of different persons available at the premises covered were recorded. In addition, stock inventories with cash and books of accounts and other documents found were prepared in different annexure and books on accounts etc. have also been impounded details therefof are placed on respective survey files/folders of the group.

Highlights of the statements recorded at the time of survey and declaration of unexplained and undisclosed income on the basis of various discrepancies pointed out on the basis of books of accounts etc. found and examined over survey proceedings-

1. Mr. Varun Maheshwari Pro of M/s Maya Commodities - PAN AGTPM 6997P

Mr. Varun Kumar Maheshwari, S/o Sri Jugal Kishor Maheshwari is a regular income tax assessee filing his return with wd 1(3), Agra. He is proprietor of M/s Maya Commodities, being one of the sub-broker of M/s L.D.K. Commodities Pvt. Ltd. dealing in speculative business of commodities on commission basis.

Maya Commodities started its business from October 2005 and continued till 31st March, 2007, and thereafter no business was done in this proprietary concern as deposed by him. At the time of survey operations, following disclosures were made after considering the discrepancies in books of accounts etc. impounded.

Unexplained and undisclosed income for AY 2006-07 Rs.10.00 lac, for AY 2007-08 Rs.15.00 lac. AY 2008-09 Rs.05.00 lac, thus total surrender of Rs.30.00 lac in these three years in addition to regular income shown, though returns of income till AY 2007-08 are claimed to have been filed.

 
2. Mr. Neeraj Kumar Maheshwari PAN ABJPM 4861F  
 
Firms/companies                          Status of Shree Neeraj Kumar
 
1. M/s Maya Trading (AAGFM8509A)                 Partner
 
2. M/s BRG Company (ABEFS0029G)                 Partner
 
3. Shri Supari & Spices Pvt. Ltd. (AAICS2490P)  Director
 

 
	Also, Shri Neeraj Kumar enjoys income as commission from supari-business as deposed by him over survey proceedings. 
 

Shri Neeraj Kumar Maheshwari has been filing his return of income with ward 2(3) Agra. During the survey proceedings statement was recorded at the business premises of Maya Commodities, where he has made a surrender of Rs.5 lac in AY 2006-07 and Rs.7 lacs in AY 2007-08 as unexplained commission income in M/s Shree Supari Spices Pvt. Ltd. assessed with ITO wd 4(4), Agra started its business activities from February 2006 and continued till March 2007, thereafter no business was made and returns are claimed to have been filed till AY 2007-08. Shri Neeraj Maheshwari has also made surrender of Rs.8 lac in M/s BRG Co., assessed with ITO 4(1), Agra in current year as unexplained investment in purchase of the building. His statement was also recorded at his shop at Chitti Khana, where he has made surrender of Rs.2.14 lacs as excess cash found in the case of partnership firm, namely Maya Trading Company. Stock inventory was also prepared at its godown situated at ground floor. S.R. Market, Daresi No.2, Agra and stocked found was finally valued more by Rs.37,11,782/-. On being asked to reconcile the excess stock found and source of investment into such excess stock. Shri Neeraj, one of the partners of the above said firm has unequivocally accepted the position of excess stock found and pointed out and has further surrendered an income of Rs.37,11,782/- as unexplained and undisclosed investment in stock found but not recorded in regular books of accounts. Shri Neeraj Maheshwari is also engaged in the business of purchase and sale of supari on commission basis in his own account. When asked as to account for commission earned and its accounting procedure followed, Shri Maheshwari has made a surrender of Rs.4 lacs in AY 2007-08 and Rs.6.5 lacs in AY 2008-09 as undisclosed commission earned during these two assessment years. Shri Satish Chand Goel other partner in M/s Maya Trading Co., assessed with ITO 4(2), Agra engaged in wholesale trading of Supari, Menthol, Ilachi and also derived income as commission agent, has also confirmed the surrender made by his partner Shri Neeraj Maheshwari, vide his statement on oath recorded on 30.01.2008. To sum up, the assessee group has made total surrender of Rs.99.75,782/- in different concerned/hands in assessment years mentioned hereinabove. During the course of survey proceedings, books of accounts and other papers in this group were impounded at different places and permission to retain them further has been taken from worthy DGIT(Inv.), Lucknow till 30.06.2008.

9. After perusal of the record placed before the Tribunal, the Tribunal has noticed that the letter which has been furnished by the assessee dated 02.06.2008 in which assessee clearly admits and stated that assessee makes surrender of Rs.30,00,000/- in the case of M/s Maya Commodities and has deposited a sum of Rs.3,00,000/- as advance income tax. In the said letter dated 02.06.2008, the assessee confirm the surrender in case of the assessee itself of Rs.5,00,000/- in the assessment year 2006-07(present assessment year) and Rs. 7,00,000/- in the subsequent year namely assessment year 2007-08.

10. We have heard Sri Suyash Agarwal, learned counsel for the appellant and Sri Gaurav Mahajan, learned Standing Counsel representing the department.

11. The learned ITAT has discussed the issue in detail while dismissing the appeal filed by the assessee by taking into consideration the entire evidence led before it by means of the survey folder placed before it.

12. Learned Standing Counsel has pointed out that during the period from the date of survey, which is held on 30.01.2008 till the proceedings could finalise by the assessing authority, the assessee never stated that he has not surrendered the amount of Rs.5,00,000/- at the time of survey as undisclosed amount.

13. Sri Gaurav Mahajan, learned counsel for the department first pointed out that even the statement which has been recorded on oath the appellant has categorically replied in pursuance of question no.5 that he has surrendered a sum of Rs.5,00,000/- as undisclosed commission for the assessment year 2006-07 and Rs. 7,00,000/- undisclosed commission for the assessment year 2007-08. Further that the appellant was accordingly revised his return with a condition that no penal proceedings shall be initiated against him. For the ready reference the aforesaid question no.5 and the reply of the appellant is being narrated hereinbelow;

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14. From perusal of the record, it is clearly transpires that while filing an application dated 27.12.2008, the appellant has stated before the Assistant Director of Income Tax (Investigation) that he was forced to surrender the said amount at the time of survey, whereas there is no evidence or material furnished by the assessee to support the said contention and in fact the assessee himself has surrendered the amount as his undisclosed commission income of Rs.5,00,000/- in assessment year 2006-07 and Rs. 7,00,000/- in assessment year 2007-08.

15. Admittedly, the assessing authority has allowed enough opportunity to the assessee starting immediately from the date of survey till the assessment order dated 29.12.2008 is passed but the appellant for the first time stated that he has been forced to surrender the said amount only a day before the assessment proceedings are completed and the assessment order has been passed i.e. 27.12.2008.

16. In view of the aforesaid, it is clearly an admission on the part of the appellant to surrender the amount of Rs.5,00,000/- as an admitted commission which itself is an important piece of evidence, therefore, statement made voluntarily by the assessee could well affirm the basis of assessment which in the instant case is done. It is well settled law that burden lays on the assessee to establish that the admission made at the time of survey by means of a statement was wrong and, in fact, there was no additional income. In the present case, this burden does not even seem to have been admitted to be discharged by the assessee.

17. In view of the aforesaid, we find that the order of the Income Tax Appellate Tribunal is concluded by the finding of facts and in our opinion, no question of law arises.

18. The appeal is, accordingly, rejected.

Order Date :-13.10.2017

A.Kr.*

[Ashok Kumar, J.]          [Abhinava Upadhya, J.]