May 2008
S. 143 r.w. S. 133A : Assessee can retract offer of additional income by furnishing details of income in course of assessment proceedings
By C. N. Vaze, Shailesh Kamdar, Chartered Accountants
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13 (2007) 17 SOT 574
Jain Trading Co. v. ITO
ITA No.5935 (Mum.) of 2002.
A.Y. 1999-2000. Dated : 30-10-2006
S. 143 read with S. 133A of the Income-tax Act, 1961 — An
assessee who makes an offer of additional income during the course of an inquiry
can retract by furnishing full details of his income in the course of assessment
proceedings.
During the course of survey proceedings u/s.133A, the
assessee offered an additional income of Rs.25 lacs, but did not disclose such
income in the return of income filed. The assessee contended that since in the
assessment proceedings it had furnished complete particulars of its business
transactions and disclosed the complete details of trading results, it was not
bound by the additional income offered at the time of survey. The Assessing
Officer did not accept the explanation of the assessee and held that after
having admitted suppression of business income to the extent of 25 lacs, it was
not open to the assessee to retract from the additional income declared during
the survey proceedings. He, therefore, added Rs.25 lacs to the income of the
assessee. On appeal, the CIT(A) upheld the order of the Assessing Officer.
The Tribunal deleted the addition and noted as under :
(1) An assessee who makes an offer of additional income
during course of an enquiry by Income-tax authorities is not bound by his
offer of additional income for all time to come. At the same time, the burden
cast upon an assessee, who chooses to retract his earlier statement, is very
heavy.
(2) In the instant case, during the course of assessment
proceedings, the assessee had completely explained entire business
transactions leading up to the date of survey and had given the details of its
trading activity.
(3) The Assessing Officer had not raised even a finger of
doubt at the account statement furnished by the assessee during the course of
assessment proceedings.
(4) Therefore, the assessee had been able to discharge the
heavy burden that rested upon him while retracting from offer of additional
income at the time of survey. Even at that stage, the case of the assessee was
that the offer was made to buy peace and not because of any concealment of
income or discrepancy in accounts detected by survey party.
