(2011) 128 ITD 459/ 9 taxmann.com 121 (Mum.) ACIT v. Safe Enterprises A.Y.: 2005-06.

Facts:
The assessee-firm was engaged in the business of civil contracts. During the course of survey, it was noticed that three invoices amounting to Rs. 76,33,179 were not entered into the books of accounts. The AO hence concluded that the labour receipts were suppressed. The partner of the firm agreed to the above findings and offered Rs.76 lakhs as additional income on that account.

However, in the immediate post-survey proceedings, the assessee was able to produce all the related documents before the assessing authority, thus retracting his earlier admission. The Assessing Officer made addition of the impugned amount despite retraction by the assessee. On appeal to the CIT(A) by the assessee the learned CIT(A) considered the matter in great detail and ultimately deleted the said additions. Aggrieved the Revenue preferred an appeal before the Appellate Tribunal.

Held:
1. Survey is essentially an evidence gathering exercise. It is an established position of law that if a disclosure is made by the assessee either under mistaken belief of facts and law due to mental pressure from the survey party or under coercion, he can retract the statement and the admission so made.

2. Reliance was placed on the Supreme Court decision in Pullan Gode Rubber Produce Co. Ltd. v. State of Kerala that admission was an extremely important piece of evidence, but it cannot be said to be conclusive. It is open to the person who made the admission to show that it is incorrect.

3. Also it was held in CIT v. Ramdas Motor Transport and Jaikishin R. Agarwal v. ACIT that if the admission in the statement is not supported by any asset or document, the retraction may be genuine.

4. The assessee, in the post-survey proceedings as well as assessment proceedings had amply demonstrated through credible evidence the source of labour receipts.

Consequently, the ITAT upheld the order of the CIT(A).