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Judgment
PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
This appeal arises from order dated 26.05.2026, passed by Ld. CIT(A), NFAC, u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”).
In this case, a survey was conducted u/s 133A of the Act on 03.02.2010. During the course of such survey the assessee had admittedly surrendered an amount of Rs.1,50,00,000/- on account of certain expenses which could not be explained at that point of time. Thereafter, in the return of income the assessee accounted for only Rs.1,00,00,000. The Ld. AO gave an opportunity to the assessee to explain why there was a shortfall in terms of the amount surrendered and the amount declared in the return of income. The assessee gave a detailed reply through which it was averred that the statement given during the course of survey proceedings was retracted as it was given under stress. The assessee also argued that except for the said statement there was no other material to justify the surrendered amount of Rs.1,50,00,000/-. However, the Ld. AO rejected the submissions of the assessee and gave a finding that there were a number of discrepancies in the books of accounts etc. which had prompted the assessee to surrender an amount of Rs.1,50,00,000/-. In the light of these findings the Ld. AO made an addition of Rs.50,00,000/-, being the differential between the amount surrendered and the amount offered in the return of income.
The aggrieved assessee approached the Ld. CIT(A) where also he could not succeed on the basis of finding recorded on pages 3 to 4 of the impugned order. It has been held by the Ld. CIT(A) that it was the responsibility of the assessee to prove that the amount added (Rs.50 lakhs) were actually available with the assessee for incurring expenses. Since the assessee did not show as to how such an amount was available with him, the Ld. AO had justifiably made the addition. The Ld. CIT(A) thereafter provided a relief of Rs.30,00,000/- and confirmed an addition of Rs.20,00,000/- (para 6.1 at pages 4 to 5 of the impugned order).
The aggrieved assessee has now approached the ITAT with grounds challenging the additions sustained by the Ld. CIT(A).
Before us the Ld. AR took us through the facts of the case and stated that while the amount of Rs.1,50,00,000/- was surrendered at the time of survey, but it was done under stress and thereafter on examining the vouchers, books, etc, it was found that the entire amount surrendered at the time of survey could not be justified. It was the submission that thereafter the assessee only offered Rs.1,00,00,000 in the return of income. The Ld. AR also drew our attention to CBDT Circular No.286/2/2003 dated 11.03.2003, to argue that it was the duty of the Assessing Officer to examine all the relevant material gathered during the course of survey and not merely rely on any so-called confessional statement of the assessee. The Ld. AR also relied on several authorities to canvass the point that a bald statement, without any supporting material, had no value. The Ld. AR also explained that the so-called discrepancies noticed by the survey party were easily explained by the fact that the assessee company maintained three cash books and the discrepancy was seen only because one such cash book was examined. Regarding the addition of Rs.1,00,000/- on account of some noting in a black diary found during the course of survey, it was explained that the said diary belonged to the accountant of the Company and had no link with actual accounts of the assessee. It was pointed out by the Ld. AR that there were several figures in that diary which had absolutely no linkage with the assessee’s accounts. The Ld. AR, thereafter, stated that the amount added with respect to the black diary and other additions u/s 43B of the Act and Rs.1,50,000/- out of miscellaneous expenses, were very much before the Ld. CIT(A) but were not adjudicated. It was pointed out that the only issue adjudicated by the Ld. CIT(A) was the issue pertaining to the alleged shortfall in the declared amount of Rs.1,00,00,000 and the surrendered amount of Rs.1,50,00,000/-.
The Ld. AR relied on the orders of the authorities below and stated that the discrepancies noticed during the course of survey were never satisfactorily explained by the assessee before the authorities below and the retraction of statement was merely an afterthought since the reconciliation of the books maintained at several places could not be done by the assessee. It was also pointed out that the remaining additions made by the Ld. AO were not adjudicated by the Ld. CIT(A).
We have considered the rival submissions and have gone through the records before us. It deserves to be appreciated that a bald statement recorded during the course of survey would not in itself be a foundation for any addition, especially if the same is contested at a later stage by the assessee. It is seen that while there has been some realization of this fact at the first appellate stage, we find that neither of the authorities below have managed to bring on record any substantial discrepancy as per the accounts found during the course of survey and the income declared in the return of income. Thus, we deem it fit to direct the deletion of the remaining addition of Rs.30,00,000/- with respect to Rs.50,00,000/- added by the Ld. AO.
Regarding the remaining additions, we find that these have not been adjudicated by the Ld. CIT(A), in spite of there being grounds to that effect. We may add that the grounds drafted by the assessee are such that they appear to be an amalgam of facts, arguments and grievances. Perhaps this may have led to the confusion and the grounds have not been adjudicated. Accordingly, we deem it fit to remand the remaining issues, as per additions of Rs.1,00,000/-, Rs.28,529/- and Rs.1,50,000/- back to the file of Ld. CIT(A) for adjudication on merits.
In the result, the appeal of the assessee is partly allowed.