Change in original statement cannot be relied unless supported by evidences

Brief of the case:

The Hon’ble Kerala High Court in the case of Parayil Balan Nair vs. CIT held that the change in statement made by a party on whose original statement the notice was issued to assessee cannot be relied without proper reasoning produced in support of such change.

Facts of the case:

• The case of the assessee was opened by Income Tax Department based on letter received from Mr. K.C Basheer who in his letter informed that he had paid a sum of Rs.15,00,000/- to the assessee on behalf of his brother Sri. K.C. Usman, a non-resident Indian doing business in Dubai.
• He further confirmed that the said amount was paid to assessee in cash and in support of the same he enclosed a copy of his Saving Bank A/c from which the required funds were withdrawn.
• Based on the letter notice was issued by Add. CIT u/s 274 r.w 271D to assessee stating that he had accepted loan in contravention of provisions of Sec 269SS , therefore, why penalty u/s 271D should not be imposed.
• Assessee in his reply submitted that the amount of Rs. Lacs received was not a loan rather only an advance received in connection with the sale of a property.
• Along with his reply he also enclosed a clarificatrory letter from the same Mr. Basheer who informed the department about the loan transaction. Mr. Basheer clarified that it was not actually a loan but was only a property advance.
• Finally, the order was passed levying the penalty u/s 271D equivalent to the loan amount.
• Assessee challenged such order before CIT(A) , who decided the appeal in favour of assessee on the ground that the transaction in question is not a loan or deposit and that therefore Section 269SS is not attracted.
• In appeal before tribunal , the order of CIT(A) and penalty order was restored. Tribunal decided the case in favour of assessee because the change in statement by Mr. Basheer was not reliable and was a planned U-turn to save assessee from penalty proceedings.
• The assessee again challenged the order of tribunal before Kerala HC.

Contention of Assessee: