Ramdev Buildcon Vs ITO (ITAT Ahmedabad)
The Ahmedabad Income Tax Appellate Tribunal (ITAT) has directed a fresh review of an assessment order, focusing on an addition of Rs. 1 crore based solely on a partner’s statement recorded during a survey. The case involved Ramdev Buildcon, a partnership firm, whose partner admitted to additional undisclosed profits during a survey conducted in 2016. However, this admitted income was not reflected in the firm’s income tax return for the assessment year 2016-17, leading the Assessing Officer (AO) to add the Rs. 1 crore to the firm’s income.
The partner’s statement, made during the survey proceedings, formed the sole basis for the AO’s addition. The Commissioner of Income Tax (Appeals) (CIT(A)) upheld this addition, as the assessee failed to appear for multiple hearings. The ITAT, however, found this reliance on a single statement without corroborating evidence problematic. The Tribunal noted that statements recorded during survey proceedings, while relevant, do not automatically hold evidential value without supporting material.
The ITAT emphasized the need for a thorough examination of the facts, particularly in light of the significant addition. While acknowledging the assessee’s consistent non-cooperation before revenue authorities, the Tribunal decided to restore the matter to the CIT(A) for a de-novo consideration. This decision was based on the principle of ensuring justice, especially considering the substantial amount involved. The Tribunal, however, imposed a cost of Rs. 5,000 on the assessee, to be deposited in the Prime Minister Relief Fund, due to the assessee’s consistent non-cooperation. This ruling highlights the importance of corroborating evidence in tax assessments and the limitations of relying solely on statements made during survey proceedings. This also shows the tribunal’s willingness to give an assessee a further chance, even after non-cooperation, when justice requires it.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals)-11, (in short “Ld. CIT(A)”), Ahmedabad vide order dated 06.05.2024 passed for A.Y. 2016-17.
2. The assessee has taken the following grounds of appeal:-
“1. The order passed by lower authorities is bad in law and required to be quashed.
2. CIT(A) erred in law and on facts in making addition of Rs. 1,00,00,000/-merely on statement of partner without any circumstantial evidence ignoring fact that statement recorded during the survey proceedings does not have any evidential value.
3. CIT(A) erred in law and on facts in passing ex-parte order and thus violated principle of natural justice.
4. Both lower authorities erred in law and on facts in passing orders without providing statements of the persons relied on and consequential cross examination.
5. Charging Interest u/s. 234A, 234B, 234C & 234D are unjustified.
6. Initiation of penalty proceedings u/s 271(1)(c) is unjustified.”
3. The brief facts of the case are that the assesse is a partnership firm and during the impugned year under consideration, the assessee filed return of income declaring income at Rs.14,61,569/-. As survey had been carried out at the premises of the assessee on 24.09.2016, in which certain documents were found and impounded and statement of Shri Santvan K. Rathod, a partner in the assessee firm was recorded. In the said statement given by Shri Santvan K. Rathod, he admitted that the assessee had received net profit of Rs. 1 crore in addition to the regular income for the relevant assessment year. However, while filing return of income, the above admitted income of Rs. 1 crore was not offered for taxation by the assessee firm. Accordingly, the Assessing Officer added a sum of Rs. 1 crore, as additional income not disclosed by the assessee firm in the return of income.
4. In appeal before Ld. CIT(A), despite issuance of several notices of hearing, none appeared on behalf of the assessee. Accordingly, Ld. CIT(A) confirmed the additions made by the Assessing Officer.
5. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A) confirming the assessment order. On going through the records of the case we observe that there has been consistent noncooperation and non-appearance by the assessee before the Revenue authorities. However, looking into the quantum of additions made in the hands of the assessee and in the interest of justice, the matter is restored to the file of Ld. CIT(A) for de-novo consideration, after giving due opportunity of hearing to the assessee. However, in view of consisting non-cooperation by the assessee at all stages of hearing, we are of the view that this is a fit case where a cost of Rs. 5,000/- be imposed on the assessee and the assessee is directed to deposit the same with to the Prime Minister Relief Fund.
6. In the result, the appeal of the assessee is allowed for statistical purposes.
This Order is pronounced in the Open Court on 15/01/2025
