By TIOL News Service

ALLAHABAD, OCT 23, 2017: THE ISSUE BEFORE THE DIVISION BENCH IS - Whether undisclosed income voluntarily surrendered by Assessee, immediately a day before completition of assessment proceedings, can be claimed by Assessee as forced surrender. NO is the verdict.

Facts of the case:

The Assessee deals in business which was commenced with effect from February, 2006 and was terminated in April, 2007. For the first period, the Assessee filed its return declaring total income of Rs.30,690/-. The case of Assessee was selected for scrutiny and during the pendency of scrutiny proceedings, survey u/s 133A was conducted by Asst DIT at the business premises of Assessee, where the books of account, documents and computer were impounded by the surveying team. During the course of survey, the statement of the Director namely Neeraj Maheshwari was recorded on oath in which he surrendered a sum of Rs.5,00,000/- as undisclosed income on account of commission. Accordingly, due notice was issued to Assessee. However, the AO noticed that Assessee did not offer undisclosed amount of Rs.5,00,000/- in its return, and therefore, AO made an addition of Rs.5,00,000/-.

On appeal, the ITAT directed the AO to produce the survey folder. After due examination of the documents, the tribunal noticed that contention of 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. The ITAT elaborately examined the survey folder and thereafter noticed that the letter which had been furnished by Assessee, in which it was clearly admitted 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.

High Court held that,

++ from perusal of the record, it is clearly transpires that while filing an application, the Assessee has stated before the Asst DIT that he was forced to surrender the said amount at the time of survey, whereas there is no evidence or material furnished by 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 A.Y 2006-07 and Rs. 7,00,000/- in A.Y 2007-08. Admittedly, the AO has allowed enough opportunity to the assessee starting immediately from the date of survey till the assessment order is passed, but the Assessee 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. In view of the aforesaid, it is clearly an admission on the part of Assessee 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.

(See 2017-TIOL-2198-HC-ALL-IT)