RAKESH KUMAR GARG, J. - (1.) THIS judgment will dispose of IT Ref. Nos. 78 and 79 of 1988 arising out of ITA No. 269/Asr/1986 and ITA No. 270/Asr/1986 for the asst. yr. 1982 -83 as the common question of law and facts is involved in both the references.
(2.) BRIEF facts giving rise to this reference are as under : course of survey proceedings, the books of account of the assessee and other documents were seized and as per letter reported by the then ITO, B -Ward, Bhatinda, who conducted the survey, that during the survey operation certain excess stock was found and the assessee surrendered a sum of Rs. 55,000 on account of value of excess stock as compared to that of available as per books of account as income for the financial year 1981 -82 relevant to the asst. yr. 1982 -83 voluntarily subject to no penalty under s. 271(1)(c).
(3.) HOWEVER , later the assessee filed returns disclosing lesser income as per their books and submitted letters stating that the additions of the above amounts had been agreed to by them under pressure, harassment and undue influence and the assessee had never surrendered any amount at the time of survey or at any other time. In support thereof, they swore their affidavits which were filed along with the letters in question. One of the letters written by the assessee to the ITO, B -Ward, Bhatinda retracting from their earlier statements made at the time of survey is reproduced hereinafter below : "To The ITO, B -Ward, Bhatinda. Sub : Regarding M/s Gian Chand Bhajan Lal, Commission Agents, Bhucho Mandi asst. yr. 1982 -83. Dear Sir, other ITOs, Inspectors of the Department, members of the staff including certain peons. It is further submitted that during survey no stock was verified actually. Books were complete and P&L a/c was duly prepared and profit as per books was duly divided among the partners of the firm. Balance sheet was also duly prepared, P&L a/c and balance sheet was duly signed by your honour. We have to say under strain that unnecessary pressure, harassment and threats were made to the partners present at the time of survey and two of the partners were forced to give in writing and were also pressed to make entries in the closed books after P&L a/c as under : 'Rs. 55,000 voluntary surrendered during survey as excess stock as income for the financial year 1981 -82 relevant to the asst. yr. 1982 -83 subject to no penalty under s. 271 (1)(c)'. sd/ - ( Harbhajan Singh ) ITO, A -Ward, The entry is not signed by any of the partners confirming this addition. We may bring to your kind notice that we deal in food grains and in Kachi Arhat of agricultural produce. In this firm, little stocking of goods is being done. During the period under consideration, the assessee only stocked gur and cotton seeds. The goods are being purchased from the local Arhties and sale is being made to the traders. There is no possibility of any excess of stock as mentioned in the above narration, which was got under pressure and threats and was asked to surrender Rs. 55,000. Keeping in view the above mentioned facts, it is submitted that as entry regarding surrender of Rs. 55,000 was got written under undue influence of power and not voluntarily, hence, we are not ready to surrender this amount and the return is being filed as per P&L a/c duly prepared and signed by your honour at the time of survey. Books have been kept in the ordinary course of business and supported by vouchers, bills and other subsidiary entries. Hence the same be accepted and the entry of surrendering Rs. 55,000 made under pressure be ignored. Thanking you, Yours faithfully, for M/s Gian Chand Bhajan Lal Bhucho Bhajan Lal Partner." ;