IN INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND KAMBLE, MS. SUCHITRA KAMBLE, JUDICIAL MEMBER No. ITA No. 3918/Del/2013 2010- Assessment Year : 2010-11 Deputy Commissioner of Vs. M/s Bansal Credits Limited, Income Tax, No.1, Ansari Road, 2nd Floor, Circle- Circle-2(1), Above Allahabad Bank, Delhi. New Delhi. Darya Ganj, Delhi 110 002. PAN : AAACB1312M. (Appellant) (Respondent) Appellant by : Shri S.K. Jain, DR. Respondent by : Shri Ajay Wadhwa, Advocate. Date of hearing : 17.08.2016 Date of pronouncement : 19.09.2016 ORDER PER G.D. AGRAWAL, VP :- This appeal by Revenue for assessment year 2010-11 is directed against order of learned CIT(A)-V, New Delhi dated 5th April, 2013. 2. only ground raised by Revenue reads as under:- ld.CIT(A) has erred on facts and in law in deleting addition made on account of additional income of Rs.3,50,00,000/- declared in course of survey u/s 133A on oath. 3. facts of case are that assessee company is engaged in business of financing of automobiles and allied through loan cum hypothecation mode. company raised funds through secured redeemable non-convertible debentures and fixed deposits from its 2 ITA-3918/Del/2013 investors. There was survey u/s 133A of Income-tax Act, 1961 at assessee s business premises on 5th November, 2009. During course of survey, Shri Kanwal Aggarwal, Director of company was shown list of secured redeemable non convertible debentures and he was asked to provide evidence of genuineness of these debentures and full details concerning these transactions. Shri Kanwal Aggarwal replied that he is unable to provide necessary evidence regarding genuineness of debentures subscribed by certain parties. Thereafter, he was asked to identify parties in respect of whom he is unable to explain genuineness, in response to which, Shri Kanwal Aggarwal surrendered sum of `2,85,18,000/-. Another list was shown to Shri Kanwal Aggarwal and he also surrendered sum of `24,66,715/- in respect of unsecured loan in said list. He further surrendered sum of `40,15,285/- as additional income. Thus, total income of `3,50,00,000/- (`2,85,18,000 + 24,66,715 + 40,15,285) was surrendered by him. assessee retracted surrender made by him vide letter dated 7th September, 2010 which was submitted on 8th September, 2010. Soon thereafter, assessee filed return of income on 13th October, 2010 in which income surrendered during course of survey was not disclosed. During course of assessment proceedings, Assessing Officer asked representative of assessee company to provide names and details of account holders, in response to which, assessee produced voluminous details and evidences running into more than 7,000 pages. Assessing Officer asked assessee to produce some of debenture holders and depositors. However, assessee could not produce any of them. In view of above, Assessing Officer made addition of `3,50,00,000/- as unexplained credit u/s 68. On appeal, learned CIT(A) noticed that out of credit in assessee s books of account, credit to extent of `1,28,39,715/- was not relevant to assessment year under consideration. He also noticed that assessee duly discharged onus which lay upon it u/s 68 by 3 ITA-3918/Del/2013 producing various documents which were in nature of application form, KYC documents, proof of identity etc. He also recorded finding These documents contain full evidence of each and every depositor . After considering these facts and evidences, learned CIT(A) found that assessee has duly discharged onus of proving cash credit u/s 68. Accordingly, he deleted addition of `3,50,00,000/-. Revenue, aggrieved with order of CIT(A), is in appeal before us. 4. At time of hearing before us, it is submitted by learned DR that date of survey was 5th November, 2009 while retraction is made by assessee on 7th September, 2010 which was almost more than 10 months from date of survey. That such long gap itself proves that retraction was after-thought and should not be given undue weightage. He stated that assessee made voluntary surrender of income during course of survey because assessee was unable to prove huge credit lying in its books of account. He, therefore, submitted that order of learned CIT(A) should be reversed and that of Assessing Officer may be restored. 5. Learned counsel for assessee, on other hand, stated that surrender was made by assessee under coercion and pressure of Department. He submitted that assessee was asked to prove genuineness of more than 3,000 creditors at time of recording of statement. It is impossible to explain by anybody genuineness of credit of 3,000 persons instantly during course of recording of statement. Therefore, director of assessee company stated that he is unable to explain genuineness of credit of all persons immediately and then he was forced to make surrender. Therefore, surrender was retracted by filing of letter as well as by not offering income in return of income. He further stated that Hon'ble Jurisdictional High Court in case of CIT Vs. 4 ITA-3918/Del/2013 Dhingra Metal Works [2010] 328 ITR 324 (Delhi) stated that statement recorded u/s 133A is not conclusive and addition cannot be based upon statement. Similar view was expressed by Hon ble Madras High Court in case of CIT Vs. S. Khader Khan Son [2008] 300 ITR 157 (Madras). decision of Hon ble Madras High Court is approved by Hon ble Apex Court in [2012] 254 CTR 228 (SC). He further submitted that during course of assessment proceedings, assessee produced all evidences in support of genuineness of credit. evidences produced by assessee were more than 7,000 pages. Assessing Officer, though acknowledged production of evidences, but simply rejected by mentioning that I do not find any force in them . He stated that Assessing Officer made addition of `3,50,00,000/- for unexplained credit u/s 68. That obviously as per statement also, sum of `40,15,285/- was not in respect of any credit. Moreover, out of credit of `24,66,715/- plus `2,85,18,000/-, credit of `1,28,39,715/- was not pertaining to year under consideration. Thus, Assessing Officer has made addition without any application of mind simply on basis of surrender made by assessee during course of survey. That CBDT also in its Circular dated 10th March, 2003 has stated that during course of assessment proceedings, Assessing Officer should rely upon evidences gathered during course of search/survey operation and then only, relevant assessment should be framed. He, therefore, submitted that order of learned CIT(A) should be sustained. 6. We have carefully considered submissions of both sides and have perused material placed before us. Though Assessing Officer has made addition of `3,50,00,000/- as unexplained credit u/s 68, apparently, he has made addition because of surrender made by assessee during course of survey u/s 133A. Assessing Officer himself has summarized 5 ITA-3918/Del/2013 surrender made by assessee at page 3 of assessment order which is reproduced below for ready reference :- To summarize total surrender made in respect of M/s Bansal Credits Ltd. is given as below :- S.No. Head Amount F.Y. 1. Unsecured Loans (unexplained) Rs.24,66,715/- 2009-10 2. Unexplained debentures Rs.2,85,18,000/- 2009-10 3. Buffer Rs.40,15,285/- 2009-10 7. From above, it is evident that obviously, surrender of `40,15,285/- was not in respect of cash credit and, therefore, same could not have been added u/s 68. Moreover, learned CIT(A) has recorded finding that credit to extent of `1,28,39,715/- was not pertaining to year under consideration and, therefore, same could not have been added u/s 68. Assessing Officer has recorded that assessee has furnished various letters explaining genuineness of credit. However, without discussing any of letters, he just mentioned that there is no force in it. If assessee has furnished more than 7,000 pages of various documents proving cash credit, there was hardly any justification to reject all of them without dealing with any of them. Totality of these facts clearly shows that Assessing Officer made addition because surrender was made by assessee during course of survey. With this, we come to legal position whether addition can be based solely on surrender made during course of survey. We find that Hon'ble Jurisdictional High Court has considered this issue in case of Dhingra Metal Works (supra) wherein Hon'ble Jurisdictional High Court, upholding decision of ITAT, held as under:- Held, dismissing appeal, that for statement to have evidentiary value, survey officer should have been authorised to administer oath and to record sworn statement. While section 132(4) of Act specifically authorizes officer to examine person on oath, section 133A did not permit same. Moreover, word may 6 ITA-3918/Del/2013 used in section 133A(3)(iii) of Act clarifies beyond doubt that material collected and statement recorded during survey was not conclusive piece of evidence by itself. It was settled law that though admission was extremely important piece of evidence, it could not be said to be conclusive and it was open to person who had made admission to show that it was incorrect. Since assessee had been able to explain discrepancy in stock found during course of survey by production of relevant record including excise register of its associate company, Assessing Officer could not have made addition solely on basis of statement made on behalf of assessee during course of survey. 8. ratio of above decision would be squarely applicable to facts under appeal because in case under appeal before us also, statement was recorded u/s 133A and not u/s 132(4) and moreover, assessee has furnished voluminous evidences to discharge onus of proving cash credit u/s 68. Assessing Officer has not specified single credit which is to be treated as unexplained. In case of S. Khader Khan Son (supra), Hon ble Madras High Court held :- Dismissing appeal, that in view of scope and ambit of materials collected during course of survey action under section 133A shall not have any evidentiary value. It could not be said solely on basis of statement given by one of partners of assessee-firm that disclosed income was assessable as lawful income of assessee. 9. That above decision of Hon ble Madras High Court has been approved by Hon ble Apex Court in [2012] 254 CTR 228 (SC). That CBDT also in its letter F.No.286/2/2003-IT(Inv.II) dated 10th March, 2003 provided as under :- Instances have come to notice of Board where assessees have claimed that they have been forced to confess undisclosed income during course of 7 ITA-3918/Del/2013 search & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by concerned assessees while filing returns of income. In these circumstances, confessions during course of search & 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 Income Tax Departments. Similarly, while recording statement during course of search, seizures and survey operations no attempt should be made to obtain confession as to undisclosed income. Any action on contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, Assessing Officers should rely upon evidences/materials gathered during course of search/survey operations or thereafter while framing relevant assessment orders. 10. Thus, even as per CBDT, addition should be based upon evidences/material gathered during course of search/survey rather on basis of statement recorded during course of survey. Admittedly, in this case, no material was collected during course of survey which could establish that credit was non-genuine. Learned CIT(A) has recorded finding that assessee has taken small credits of below `20,000/- from various persons. However, as per KYC documents prescribed by RBI, PAN card or ration card or voter ID etc. were obtained in respect of each and every depositor and same were furnished before Assessing Officer. assessee has also produced copy of debenture application form as well as debenture allotment letter. Debenture trust deed was executed by company with debenture trustee to secure and protect interest of debenture holders who are small investors. He has also produced deed of hypothecation for hypothecating movable assets and receivable thereon of company in favour of trustee as per debenture trust deed. Learned CIT(A) has discussed all these documents in detail from pages 5 to 17 of his order and thereafter 8 ITA-3918/Del/2013 arrived at conclusion From all these documents requisite ingredients of section 68 are duly fulfilled, genuineness of debenture amounts and fixed deposit amounts is duly established and it can be said that assessee has discharged its primary burden under law . After considering facts and arguments of both sides, we do not find any infirmity in above finding of learned CIT(A). There was credit in assessee s books of account of small amounts of below `20,000/- each from more than 3,000 persons. assessee has furnished necessary evidences in respect of those creditors, which was more than 7,000 pages. Assessing Officer acknowledged furnishing of those evidences but rejected them summarily with following finding :- In response assessee company has filed various letters explaining genuineness of credits. I have gone through replies but do not find any force in them. 11. Thus, Assessing Officer, without discussing case of single creditor, rejected all of them. Learned CIT(A) has discussed all those documents from page 5 to 17 of his order. Assessing Officer made addition of `3,50,00,000/- as unexplained credit u/s 68 when admittedly, sum of `3,50,00,000/- was surrender made by assessee during course of survey and was not amount of credit in assessee s books of account. Credit in assessee s books of account was only `3,09,84,715/-. Learned CIT(A) has also recorded finding that credit to extent of `1,28,39,715/- was not pertaining to year under consideration. Thus, it is evident that Assessing Officer made addition without considering all facts and evidences on record merely because assessee has surrendered same at time of search. We have already discussed that in view of decision of Hon'ble Jurisdictional High Court in case of Dhingra Metal Works (supra) and of Hon ble Apex Court in case of S. Khader Khan Son (supra) as well Circular of 9 ITA-3918/Del/2013 CBDT vide letter F.No.286/2/2003-IT(Inv.II) dated 10th March, 2003, addition cannot be made only on basis of surrender made at time of survey. In view of above legal and factual position, we do not find any infirmity in order of learned CIT(A). Accordingly, same is upheld and Revenue s appeal is dismissed. 12. In result, appeal of Revenue is dismissed. Decision pronounced in open Court on 19.09.2016. Sd/- Sd/- KAMBLE) (SUCHITRA KAMBLE) (G.D. AGRAWAL) AGRAWAL) JUDICIAL MEMBER VICE PRESIDENT VK. Copy forwarded to: - 1. Appellant : Deputy Commissioner of Income Tax, Circle- Circle-2(1), New Delhi. 2. Respondent : M/s Bansal Credits Limited, No.1, Ansari Road, 2nd Floor, Above Allahabad Bank, Darya Ganj, Delhi 110 002. 3. CIT 4. CIT(A) 5. DR, ITAT Assistant Registrar Deputy Commissioner of Income-tax, Circle-2(1), New Delhi v. M/s Bansal Credits Limited