Statement given during the course of survey is not a statement on oath as given u/s. 132(4) of the Act and therefore has no evidentiary value.

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Statement given during the course of survey is not a statement on oath as given u/s. 132(4) of the Act and therefore has no evidentiary value.

ITAT INDORE

M/S ALANKAR JEWELERS VERSUS DCIT, ITARSI

ITA No. 992/Ind/2019

Short overview of the case:

Addition based on survey proceeding

  Unexplained stock of gold and silver jewellery

  The statement given during the course of survey is not a statement on oath as given u/s. 132(4) of the Act and therefore has no evidentiary value.

 Reliance should be placed upon the evidence/materials gathered during the course of survey operations while framing the assessment orders.

  Therefore this finding of Ld. CIT(A) that the assessee was required to honour income surrendered during the course of survey and offer it to tax finds no merit.

 The issue before ITAT was whether the statement given during the course of survey u/s. 133A of the Act is “a statement on oath having any evidential value”? –

ITAT has held as under:-

 The statement given during the course of survey is not a statement on oath as given u/s. 132(4) of the Act and therefore has no evidentiary value.

Reliance should be placed upon the evidence/materials gathered during the course of survey operations while framing the assessment orders.

Therefore this finding of Ld. CIT(A) that the assessee was required to honour income surrendered during the course of survey and offer it to tax finds no merit.

The case of S. KHADAR KHAN SONS [2007 (7) TMI 182 – MADRAS HIGH COURT] was also discussed.

On the issue of additions towards excess Gold, ITAT observed as under:

 Complete details of purchase of gold jewellery of 6388.66 grams is available.

 Complete quantitative details with invoice number and party name are available. Similarly for the sales 6962.74 grams details of sales have been filed.

 Since the assessee is registered under the Value Added Tax all these details of sales are filed before VAT authorities and the invoice up to the date of survey were examined by the survey team.

Thus going through the above details of trading account for the period 01.04.2015 to 15.12.2015, we find that the quantity details filed by the assessee with regard to the opening stock purchase sales and closing stock are correct and are duly supported by material evidence and thus should be accepted in place of the oral statement given by the partner during the course of survey.

  Therefore the excess stock of gold jewellery at the time of survey was only at 108.732 grams and not the alleged figure of 5770.960 grams.

 Therefore no addition for excess gold jewellery was called for.

On the issue of Excess silver jewellery, ITAT held as under:

As details of purchase and sales has not been confronted by the revenue authorities at any stage.

Sales are subject to VAT, Invoices have been issued which were verified during survey and assessment proceedings. Under these facts in our considered view the “Evidence” needs to be given preference to the ‘oral’ statement given by the partner of the firm.

 Therefore silver jewellery as per the books has rightly been computed at 207.585 gram and therefore the excess stock of silver jewellery is only 28.91 kg (Physical stock 236.500 kg less books stock 207.585 kg).

Since the value of excess stock of silver jewellery has already been offered to tax in the return of income filed u/s. 139 of the Act no addition was called for unexplained silver jewellery at ₹ 20,46,965/- by the Ld. A.O. and the same is deleted. In the result addition for excess gold jewellery and silver jewellery

On the issue of Excess cash, ITAT observed as under:

On perusal of paper book relating to the inventory of cash found at the assessee’s business premises the document shows that total cash found at the time of survey was ₹ 4,58,610/- only.

 This inventory of cash found is signed by the Officer present during the course of survey.

  Thus it remains undisputed that physical cash found at the time of survey was at ₹ 4,58,610/- only and the cash as per the books has also at ₹ 4,58,610/-.

 Ld. Departmental Representative could not controvert this fact by placing any contrary material.

  Since there is no excess cash as on the date of survey we hereby delete the addition made of excess cash of ₹ 3,75,510/- made by the Ld. A.O.

Thus Ground No. 3 of the assessee’s appeal is allowed.

On the issue of Unexplained expenditure, ITAT observed as under:

 We observe that unexplained expenditure was part of the surrender made during the course of survey.

Admittedly no incriminating material was found with regard to any unaccounted expenditure nor the Ld. A.O. has referred any such incriminating material in the assessment order.

Ld. CIT(A) has also not referred to any such material found during the course of survey showing any proof of unaccounted expenditure not accounted for in the books.

Under these given facts it is blatant that the alleged addition of ₹ 1,00,145/- for unexplained expenditure u/s. 69C is based merely on the statement made during the course of survey which has no evidentiary value and thus this addition could not stand for and the same is deleted.

 Thus Ground No. 4 of the assessee is allowed.

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