INCOME TAX ACT, 1961

Section 143(3) Section 153A Section 69

Assessment - Addition to income - Alleged under invoicing of sales admitted under section 132(4) -

A search under section 132 was conducted on 30-8-2016 in the group cases of Arunachalam Manickavel, Guntur and covered his residence as well as the business concerns of the assessee. A statement under section 132(4) was recorded from Arunachalam Manickavel, the proprietor of Bharathi Soap Works. In the statement he also admitted that under invoicing was done to the extent of 8% of the actual sale value and no further expenditure was incurred. The cash was stated to be received by SJ, petty cashier of group concerns and remitted the same to Mr. RS, Head Cashier, who, in turn, remitted the same to the assessee. Further, the assessee also admitted the undisclosed income of Rs. 37,84,91,758 in the hands of M/s. Bharathi Soap Works, Proprietary concern of the assessee. Subsequently, AO issued notice under section 153A calling for the return of income for the assessment years 2011-12 to 2016-17 and in response to which the assessee filed the return of income admitting same incomes which were already admitted in the returns filed under section 139(1), thus, retracted from the admission given under section 132(4). Assessee argued that the there was no case for making the addition on the basis of statement recorded under section 132(4) on the assumption of receiving the cash back from the distributors. The CIT(A) held that assessee having retracted the admission, the AO cannot make the addition on the sole basis of statement recorded under section 132(4), thus, the additions made by the AO were unsustainable, accordingly deleted the additions on account of underinvoicing of the sales. Held: Assessee was continuously attending to the investigation teams and cooperating with the teams continuously from 30-8-2016 to 3-9-2016 with the interval of few hours. Multiple statements were recorded, thus, Tribunal did not hesitate to agree with the assessee that assessee was under constant pressure and the statement was given under mental stress and pressure with an intention to somehow to get rid of the departmental officers or take some relief from the searches. Therefore, the admissions made under such circumstances without the corroborative evidence cannot be made basis for making the additions. In the instant case there was no evidence found in the premises of the assessee to show that the assessee was under invoicing the sales. No other material was found and seized from the premises of the assessee with regard to receipt of cash from the distributors. No evidence was found in the premises of the distributors also to establish that assessee was paid unaccounted cash by the distributors. The AO could not rebut the submissions of the assessee with regard to sale price and under invoicing with relevant facts and evidences. Therefore, additions made on the basis of statement under section 132(4) without having corroborating evidence was unsustainable and accordingly, the order of CIT(A) was upheld and the appeals of the revenue were dismissed on this issue for the assessment years 2011-12 to 2016-17.

Relied:Gajjam Chinna Yellappa. v. Income Tax Officer, (2015) 59 taxmann.com 69 (Andhra Pradesh and Telangana) : 2015 TaxPub(DT) 0522 (AP-HC), CIT, Karnataka. v. Shri Ramdas Motor Transport Ltd. (2015) 55 taxmann.com 176 (Andhra Pradesh), CIT-II, Hyderabad. v. Naresh Kumar Agarwal, (2014) 369 ITR 171 (AP) : (2015) 53 taxmann.com 306 (AP) : 2015 TaxPub(DT) 0435 (AP-HC), Pullangode Rubber Produce Co. Ltd. v. State of Kerala, (1973) 91 ITR 18 (SC) : 1973 TaxPub(DT) 0089 (SC)

REFERRED : DCIT v. Lingam Tulsi Prasad (2016) 49 ITR 218 Hyderabad : 2016 TaxPub(DT) 3363 (Hyd-Trib), the decision of AP High Court in the case of CIT v. AMR India Ltd. in ITTA No. 354 of 2014, dated 12-6-2014 and the decision of this Tribunal in the case of Y.V. Anjaneyulu v. Dy. CIT (2017) 88 taxmann.com 568 (Visakhapatnam) : 2017 TaxPub(DT) 4048 (Visakhapatnam-Trib) and Bhavanasi Anjaneyulu v. ACIT in I.T.A. No. 261, 262, 263, 349 & 354/Viz/2017, dated 19-1-2018.

FAVOUR : In assessee's favour.

A.Y. : 2011-12 to 2016-17

INCOME TAX ACT, 1961

Section 143(3) Section 68 Section 153A

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