Case Law Details

Case Name : Shri Kantilal C. Shah Vs. The Asst. CIT Circle- 3 (ITAT Ahemdabad)
Appeal Number : IT (SS) A No. 21/AHD/2009
Date of Judgement/Order : 24/06/2011
Related Assessment Year : 1985- 95

Shri Kantilal C. Shah Vs. The Asst. CIT Circle- 3 –

ITAT Ahemdabad

IT (SS) A No. 21/AHD/2009

Block Period: 1-4-1985 to 31-3-1995 &

1-4-1995 to 12-12-1995

O R D E R

PER SHRI MUKUL Kr. SHRAWAT, JUDICIAL MEMBER :

This is an appeal at the behest of the Assessee which has emanated from an assessment order passed u/s. 158BC/143(3) r.w.s.254 of the I.T. Act, 1961 dated 24.12.2008 and the grounds which have been argued before us are as follows:-

1. The Learned Assessing Officer has erred in law and on facts of the case in making addition of Rs. 1,30,700/- during the year 01/04/1994 to 31/03/1995 in respect of marriage expenditure of daughter of the Appellant though no evidence in respect of incurring such expenditure was found during the search.

2. The Learned Assessing Officer has erred in law and on facts of the case in making addition of Rs. 2,00,000/- during the year 01/04/1994 to 31/03/1995 by way of investment in the shares made by Diwaliben Chhotalal, Chhotalal Gulabchand, Pukhraj Chhotalal and Kaveriben Pukhraj to the total income of the Appellant though investment of shares was not made in the name of the Appellant and some of the persons are assessed to income-tax.
3. The Learned Assessing Officer has erred in law and on facts of the case in making addition of Rs. 45,000/- by way of unexplained household expenditure for the block year 01/04/1994 to 31/03/1 995 though no evidence of incurring such expenditure was found during the search.
4. The Learned Assessing Officer has erred in law and on facts of the case in making addition of Rs. 20,000/- by way of investment in NSC for the block period 01/04/1995 to 1 2/1 2/1995 though no evidence in respect of such investment from undisclosed source was found during the period search.

5. The Learned Assessing Officer has erred in law and on facts of the case in making addition of Rs. 2,90,000/- in respect of payment of on-money for purchase of flat and addition of Rs. 1,25,000/- in respect of unaccounted investment in furniture during the block period 01/04/1995 to 1 2/12/1995 though no such evidences were found during the search.

2. Before we proceed to decide the merits of the case, it is worth to place on record that in the past, as well, this appellant had gone in appeal before the Tribunal and at that time contested that proper opportunity of hearing was not granted. The Respected Coordinate Bench had considered the said request of providing a re-hearing , therefore vide an order dated 22/03/2005,in IT(SS)A Nos. 60, 61 & 62/Ahd/1997 (Block assessment period 1-4-1985 to 12-12-1991) titled as Shri Ambalal K.Shah & Others vs. Dy.CIT, had restored the matter back to the AO with the direction to grant adequate opportunity and to decide accordingly. The impugned assessment order now under appeal has been passed following the directions of the Tribunal.

3. Facts in brief were that a search operation was carried out on 12/12/1995 and during search operation cash, jewellery, books of account and certain documents stated to be pertaining to the assessee were found and seized. In compliance of a notice, a return was filed for the block period. As per the information available on page No. 2 of the assessment order in the past this appellant had disclosed an income of Rs. 2,71,194/- in the regular course of assessment proceedings, however, the undisclosed income, as per the block return, as computed u/s. 158BB of the I.T.Act for the block period, included the income already disclosed, therefore, the total income was declared at Rs. 3,71,194/-, resultantly, the difference between the two, i.e. Rs. 1 lac was declared as undisclosed income for the block period. In the past, assessment was completed on 27.12.1996 on the total undisclosed income at Rs. 14,74,272/-, however, in the second round of assessment proceedings consequent upon the order of the Tribunal, the total undisclosed income was assessed at Rs. 7,10,700/-.

3.1. Assessee is a Director in a Company and partner in few Firms. The main source of income was declared under the heads, as profit from partnership-firm, salary and interest on deposit. A statement u/s.132(4) dated 12/12/1995 was recorded and the AO has prepared a chart of the admission of unaccounted income as follows:

Sr. No. Details of  unaccounted
income
Amount (Rs.) Relevant portion of the statement
  1. 1.   
On-money  payment  for
purchase of flat

2,50,000/-

Ans. to Q.6
  1. 2.   
Unaccounted investment in
furniture

1,25,000/-

Ans.to Q 8 & 9
  1. 3.   
Unaccounted expenditure in marriage

1,30,700/-

  1. 4.   
Expenditure in marble

45,000/-

  1. 5.   
Unaccounted cash

40,000/-

Ans. to Q.8
  1. 6.   
Unaccounted expenditure

30,000/-

Ans.to Q.22 & 23
> Total

6,20,700/-

3.2. Since the aforesaid disclosure was made as per the statement u/s. 132(4) therefore a show-cause was issued as to why the stated undisclosed total income of Rs.6,20,700/- be not assessed for the block period. Our attention has been drawn by ld.AR that asses see vide letter dated 19/11/1996 retracted,(annexed an affidavit date 1.10.96), the said statement which was recorded u/s.132(4) date 12.12.95 during the course of search.

4. At this juncture, it is worth to deal with the vehement contention of ld.AR Mr.M.G.Patel that no addition should have been made merely on the basis of a statement recorded u/s.132(4) when there was no evidence or incriminating material discovered at the time of search. Ld.AR has also contested that through an Affidavit dated 01/10/1996 the said statement was retracted. In the said Affidavit the deponent, i.e. the assessee has affirmed that a copy of the statement was not provided to him directly but somewhere in the month of September his brother and one of his friends have received a copy of the said statement. So, he has stated that on reading that statement he had decided to retract the said incorrect statement alleged to be extracted from him under pressure. It was further alleged that his 85 years old father was forcefully asked to come at the place of search to put pressure on the asses see. It was also stated in the name of God that during the course of search he was not mentally fit because there was an apprehension of cancer for which he was advised to undergo biopsy. However, biopsy was performed and cancer was ruled out. In the said Affidavit, therefore, it was concluded that the impugned disclosure of Rs. 6,20,700/- was forcefully obtained which was not an unaccounted income earned by him, hence the said statement was not binding on him. Ld.AR has read the said retraction before us, the salient features of which are reproduced herein below:-

“AFFIDAVIT

I, KANTILAL CHHOTALAL SHAH, aged about 52 years, residing at B-5/Sumeru Flats, Sukhram Co. Op. Society, Kabircchowk, Sabarmati, Ahmedabad hereby solemnly state and affirm as under:

That there was an Income-tax raid at my house in the month of December, 1995 and the Officers of the Income-tax Department have taken my statements. I do remember that I had asked for the copy of the statement which was recorded by them, but the same was not given to me. Somewhere in the month of September, my brother Pukhrajbhai and his friend Shri Shailesh Bhandari received the copy of the statements recorded by the Income-tax Department during the search/raid, at the place of Electrotherm group, Pukhraj B.Shah and at my house etc. On receiving the copy of the statements I recollect that the Income-tax Department had obtained my statements wherein I was asked to disclose Rs. 6,25,700/- as under:

(1) Unaccounted investment in flat

Rs. 2,50,000

(2) Unaccounted Investment in furniture

Rs. 1,25,000

(3) Unaccounted expenditure in marriage

Rs. 1,30,700

(4) Expenditure in marble

Rs. 45,000

(5) Cash found

Rs. 30,000

(6) Household expenses

Rs. 35,000

Total-                                                                                 Rs. 6,25,700

I am therefore after reading my such statement, making this Affidavit with a clear purpose to retract such incorrect statement obtained by Income-tax Department from me. I, in the name of my God state that during the raid the Income-tax Officials had made lot of pressure and tactics and had tortured me. To give an example, my father who is 85 years old, and is staying Sabarmati D- Cabin was forcefully asked to come to my house. Though they had no search warrant, they had gone to my father’s house and forcefully brought him at my house.

I was grilled and questioned on hundred of points and I recollect clearly that an Officer was writing the question and answer on his own and only those questions and answers which he was thinking worth was written. As soon as a page was over he was writing on the next page and after writing about 10 to 15 pages he obtained my signatures on all pages without even permitting to read fully. Only on the last page I was able to read that the statement has been given by me willingly and without any pressure etc., but this is not the correct state of affairs. In the name of God I am able to clarify the correctness of this affidavit because I was not mentally fit to give correct and truthful statement of various questions. I was having lot of trouble in my neck and in the first week of December the Doctors doubted something like Cancer and advised me to do Biopsy. I was very much nervous because of such advise and was under tremendous shock and imbalanced mind. As soon as the Income-tax department left around 13th or 14th December, I was immediately hospitalised on 15-12-1995 for 3 days.

Even today I am under severe mental tension and pressure and after doing Biopsy in my neck the doubt of Cancer was ruled out. I am still not fully fit and I am loosing my temper and control on me very frequently.

This Affidavit is made by me voluntarily to clarify the above facts and particularly to retract the forcefully obtained disclosure of Rs.6,25, 700!- which in fact is not unaccounted income earned by me showing investment in various assets. I hereby declare that the statement recorded by the Income-tax Officers on 12-12-1995 does not give true and correct replies of my answers and the same is not binding on me.

Whatever is stated above is true and correct.

AHMEDABAD                                                                        Sd!-

DATED ; 1 -10-1996           (KANTILAL CHHOTALAL SHAH)

Sd!-

(Seal)                                                            A.M.Narmawala

Notary”

Ld. AR has cited few decisions in support of his legal proposition that a statement which was not supported by any evidence recorded during the course of search operation and if later on that statement has been retracted, then the disclosure made in the said statement must not be made the basis of assessment of undisclosed income. All those decisions have duly been discussed during the course of hearing of this appeal. However, one of the cited decision, namely Radhey Shyam Tanwar vs. ACIT reported at 77 TTJ 505 (Jodh.) was admittedly not a decision connected with the facts of the case, hence, hereby held as a misplaced citation.

4.1. The decision of Rajesh Jain vs. Dy.CIT reported at 100 TTJ 929 (Delhi) was relied upon by the ld.AR but this decision also appears to be misplaced primarily because of the reason that the search was conducted on that assessee on 20th July-2000 and the operation of the bank accounts and other relevant material, such as, computer server were either seized or restrained to operate. The restrain continued from July-2000 to Feb-2001. Thereupon, on 12th February-2001 a confessional statement of the said assessee was recorded. On those circumstances, it was found by the Respected Coordinate Bench that the adhoc disclosure as per the belated confessional statement was not based upon the material available at the time of search. As against that, in the present appeal, there was no gap between the date of the search and the statement recorded of this appellant on 12/12/1995. As per the copy of the statement u/s. 132(4) it is evident that the same was recorded at 12’ O clock on the day of search on 12/12/1995. We have also noticed an another distinction that in the cited decision of Shri Rajesh Jain (supra) the alleged confessional statement was recorded by DDIT (Investigation) u/s. 131 of the I.T.Act, 1961. As against that in the assessee’s case the statement which was relied upon by the Revenue Department for the additions in question was recorded u/s.132(4) of the I.T.Act. Hence, according to us even this decision do not help the assessee.

4.2. Likewise the decision of Shree Chand Soni vs. DCIT reported at 101 TTJ 1028(Jodh.) was altogether on different facts because the said statement was recorded u/s. 132(4) of the Act in respect of an addition regarding bogus capital but that bogus capital was not supported by any incriminating document. Rather this decision is relevant because vide paragraph No. 44, it was observed that no addition could be made under Chapter XIVB unless any incriminating documents or evidences were found during the course of search. Certain amount were surrendered by the assessee himself and, therefore, it was held that what had been surrendered voluntarily was to be sustained and the remaining addition being based upon estimation alone held as unsustainable. Our observation in this regard is that there is no specific criterion about the nature of an evidence i.e. it can be in any form viz. a house, a flat, a furniture, an event, a ceremony in the family, so and so forth, all depends upon case to case. Hence, we will find out from the facts of this case that whether there was any incriminating evidence on the basis of which the addition was made or whether impugned statement recorded under section 132(4) of the Act was simply a bald statement.

4.3. The decision of CIT vs. Shri Ramdas Motor Transport reported at 238 ITR 177(A.P.) was basically on the interpretation of the section 132(4) of the Act. In the said decision the Explanation inserted to section 132(4) of the Act has also been discussed and held that from 01/04/1989, it was permitted to record a statement in respect of all matters relevant for the purposes of any investigation connected with any proceedings. On careful perusal of this cited decision, we are of the view that it does not help the assessee but it helps the Revenue for its justification to record the impugned statement.

4.4. The decision of Deepchand & Co. vs. ACIT reported at 51 TTJ 421 (Bom.) was placed in the compilation but ld. AR does not refer any paragraph of this precedent because the accepted factual position was that in that case the statement was recorded after the continuous search operation for more than two days and two nights and considering the circumstances, it was held that the said statement was not recorded without any fear or voluntarily. Rather, in that case a retraction was found to be duly supported by proper evidence. Contrary to this, the retraction before us; as  reproduced above; is a general, rather a vague, retraction and there is no supporting evidence to demonstrate that the impugned statement was factually wrong.

4.5. The decision of ACIT vs. Jorawar Singh M. Rathod reported at 94 TTJ 867 (Ahd.) also do not assess much this assessee because as per the highlighted portion it was observed that the science has not yet invented any instrument to test the reliability of the evidence placed before a Court. It was further observed that the Court has to judge any evidence by applying the test of humane probabilities. There was an adhoc disclosure which remained unsubstantiated, hence, deleted. Contrary to this, here in the present appeal, there is no adhoc disclosure but specific question in respect of a specific asset! expenditure was asked and thereafter on account of point-wise admission!surrender the additions in question were made.

4.6. A strong reliance was placed on the decision of Hon’ble Madras High Court pronounced in the case of CIT vs. K.Bhuvanendran And Others reported at 303 ITR 235 (Mad.). Facts have revealed that the said assessee reached Chennai at 6.a.m. on 19!03!1999 and soon after his arrival after train journey search officials raided his premises at 7.30 a.m. There were two police officers with guns along with the Revenue Officers. It was told to that assessee that the search proceedings would be completed smoothly had he agreed for the existence of on-money payment of Rs. 23 lacs.  Unaware of the consequences, the assessee had admitted. On 08/02/2001, the said admission was retracted. There was a purchase of commercial complex for a sum of Rs. 34 lacs, however, over and above the said amount there was an admission of Rs. 23 lacs as on-money payment. In support of his retraction, the assessee has not only produced the other co-owners but he has also produced the sellers of the said property from whom the assessee has purchased the said property. Since it was an adhoc admission and there was no specific material or evidence was found consequent upon the search from the possession of that assessee of payment of on-money and after considering the surrounding circumstances, the addition was directed to be deleted. It is worth to mention that a survey was also conducted at the business premises of those sellers but even no evidence of on-money was stated to be unearthed. On these peculiar circumstances a verdict was given by the Honourable Court, however, as against that, there is no such peculiarity evidenced in the present appeal before us.

4.7. A decision of Third Member Ahmedabad ITAT in the case of DCIT vs. Pramukh Builders reported at 112 ITD 179 (TM) [Ahd.] has been cited. This decision was distinguished by the ld.DR and stated that there were several statements recorded and the statement was recorded after a gap of almost three months after the search and disclosure was enhanced. Because those disclosures remained unsupported and did not connect with any specific asset, therefore, in the absence of any evidence, no addition had been sustained. In the present context, ld.DR Mr. S.K. Gupta pleaded that the statement recorded of this assessee was in respect of certain specific assets as also some specific expenditure, therefore, do not match with the facts of the said precedent cited.

5. Before we proceed further, it is necessary to examine the statement recorded u/s.132(4) of the I.T.Act on 12/12/1995. In all, 65 questions have been asked and point wise those were those were answered by the assessee. At the end of the statement it was categorically stated quote, “the above statement, replies I have given without any pressure and with my cleaverity (sic.) & hence it is accepted to me and binding to me” unquote. In respect of ground No.1, i.e. expenditure incurred for the marriage of assessee’s daughter, relevant question were from Question No. 2 1 to Question No.26 were asked and now reproduced below:

“Q 21. In the last two years in your family any function arecomes out or not?A.21. In the yer 1994 dtd. 4.12.1994 my daughter namely Minaben ’s marriage function I have done.

Q 22. In marriage ceremony how much Tola ornaments your have given?

A 22 In my daughter’s marriage ceremony I have given seven Total gold ornaments to her.

Q 23 In marriage ceremony how much expenses you have done?

A. 23- In marriage ceremony I have done the expenses as narrated below:-
(1) 500 Nos. of Invitation card

1200/-

(2) Cook’s charges

4000/-

(3) Mandap decoration exp.

21000/-

(Bhavani Decorators, Ramnagar)

 
(4) Cooking materials exp.

30000/-

(5) Clothes exp.

25000/-

(6) Ice-cream expenses

7000/-

(7) Miscellaneous. Exp. (including Majuri)

19000/-

(8) Gold expenses

30000/-

(9) Silver expenses

500/-

Total exp-                                                                                           130700/-

Q 24. The above mentioned amount of Rs.130700/- expenses you have done in the marriage ceremony whether you have accounted in the accounts books or not?

A 24 Rs. 1,30,700/- amounts of marriage expenses I have not made any entry in the books of accounts. This is my unaccounted income. I have also not obtain any bills from any party. I have no explanation regarding the expenses which I possess as unaccounted income & I have utilised it in marriage ceremony of my daughter.

Q 25. In marriage ceremony of your daughter how many guest you have invited?

A 25. In this marriage ceremony I have invited 400 to 500 persons.

Q 26. In marriage ceremony how many amounts have you have received as “CHANDLO”.?

A 26. In marriage ceremony I have received approximately Rs. 7000/- as a Chandlo & I have given it fully to my daughter.”

5.1. On the basis of above statement, the observation of the AO was that it was accepted that the marriage expenses were not at all recorded in the books of accounts. Though it was contested before the AO that the figures were on estimate but that argument was rejected by the AO on the ground that those figures were informed by the assessee himself and nothing contrary to the statement was placed on record. Resultantly, the said amount of Rs.1,30,700/- was taxed for 1994-95 of the block period.

5.2. We have heard both the sides. We have also perused the retraction made by the assessee. First, we shall deal with the admissibility of the retraction in the present set of facts and circumstances of the case. A search was conducted on 12/12/1995 and on that very day a statement u/s. 132(4) of the Act was recorded on 12/12/1995 at 12’O clock, however, after a lapse of around nine and a half months, i.e. 01/10/1996. a retraction was made through an Affidavit. It is also important to place on record that the said retraction was not immediately submitted before the AO but it was submitted through a covering letter dated 19/11/1996. This was pointed out by ld.DR Mr.S.K.Gupta that the retraction in the form of an Affidavit dated 1/10/1996 was kept with the assessee for 11/2 months and on 19/11/1996 it was submitted before the AO. According to his pleadings the said delay thus demonstrated that the assessee was not confident about filing of the retraction.

5.3. We have perused the contents of the retraction which appears to be general in nature and there is no specific mention of a particular admission which was claimed to be retracted. There was a mention of ill-health or mental disturbance. In the said retraction, there was also a mention of some pressure tactics applied by the revenue but remained unsubstantiated. There was no reference or mention of any evidence. As noted above, though at the close of the statement recorded it was duly verified that the same was made without any pressure but it was so alleged in the impugned retraction. Had there been any pressure or torture as alleged, the assessee would have complained the same to the Commissioner or to any other Authority. No such attempt was ever made. Law in respect of admissibility of a retraction is very well settled. There must be some convincing and effective evidence in the hands of the assessee through which he could demonstrate that the said statement was factually incorrect. An assessee is under strict obligation to demonstrate that the statement recorded earlier was incorrect, therefore, on the basis of those specific evidences later on retracted. Further there should also be some strong evidence to demonstrate that the earlier statement recorded was under coercion. In the present case, the retraction is general in nature and lacking any supportive evidence. Rather assessee took several months to retract the initial statement, which by itself created a serious doubt. A simple question was asked that whether any marriage in the family had solemnised and the assessee on his own has explained the details of the marriage of his daughter along with the details of the expenditure, namely expenditure on invitation card, mandap decoration, cloths, etc. As per the portion of the said statement extracted above, it is clear that those expenditure have never been recorded in the books of accounts of the assessee. It has also been affirmed that no bills of those expenditure have been obtained by the assessee. There is no denial of this fact that marriage had in fact solemnised. Once it was an admitted fact, then a father ought to have incurred the expenditure Under these circumstances, when there was no disclosure at all, and the only information with the Revenue Department was the statement of the assessee recorded at the time of search then the statement itself is the sufficient evidence. That statement was not vague but very specific that the marriage was solemnised on 04/12/1994 and it was also specified that a sum of Rs. 1,30,700/- were expended describing several heads of expenditure mentioned. The only argument of ld. AR was that apart from the said statement no other evidence was found but this argument has no force as also no legal support because the statement recorded u/s. 132(4) of the Act was an evidence by itself. It is also not the case of the assessee that some of the marriage expenses were incurred and rest were an adhoc estimation. Rather, this is the case where no expenditure at all was found recorded, but the event of marriage was accepted. If the marriage had happened then naturally some expenditure by the father ought to have been incurred, therefore, the expenses which were informed by the father were added as such without any change or enhancement in the block period. This action of the Revenue cannot be said to be unreasonable. Hence, we hereby affirm the same. This ground of the assessee is, therefore, dismissed.

6. Apropos Ground No. 2, the observation of the AO was that the assessee in his statement has stated that an investment of Rs. 4 lacs in shares was made. Out of which some investment was found to be explained by the assessee. However, the investment made in the name of Diwaliben Chhotalal, Chhotalal Gulabchand, Kukara Chhotalal, Kaveriben Upraj etc. totalling to Rs.2 lacs was stated to be out of unaccounted income. Accordingly, the addition was made.

7. Nothing specific is now argued before us about the source of the impugned investment except that the statement recorded u/s.132(4) of the Act was retracted and that apart from the said statement no other evidence was found at the time of search.

7.1. In this regard, we have first examined the statement of the assessee and the relevant questions were as under:

“Q.31. In your name as well as in your family members how much amount you have invested in shares ?

A.31. I have invested money in shares are as below:-

(1) Divaliben Chhotalal,

(2) Chhotalal Gulabchand

(3) Pokhraj Chhotalal

(4) Kiranben Pokhraj

(5) Savitaben Kantilal

(6) In the name of H. U.F. as well as individual name I have invested in share business.

The approximately share investment comes to Rs. 3,50,000/- to 4,00,000/-.

Q.32 The above share investment amount is narrated and mentioned in the books of account or not?

A.32 In the name of Savitaben Kantilal approximately amount of Rs. 50,000/- entry made in the books of accounts. Moreover my HUF as well as Individual there are no entry passes in the books of accounts. Moreover in the share transaction my family members four names are there. There are no entry in the books of accounts. Approximately amount are Rs. 2,00,000/-. I have no explanation for the same.”

7.2. Even this statement cannot be said to be a vague or a formless statement. A simple question was asked that was there any investment in shares? and in compliance the correct facts were narrated . It was also narrated that some of the investments in shares were entered in the books of accounts, however, in respect of some of the investment in the name of four family members, there was no entry in the books of accounts. That amount was found to be Rs.2 lacs and accordingly taxed. Ld.AR Mr.M.G. Patel has simply argued that the said statement was retracted, but in the absence of any evidence furnished to demonstrate that the assessee was in fact coerced or incorrect in narrating the facts , that retraction has no legal value. It was a bald retraction and an allegation of compulsion or coercion must not be accepted merely on a statement if remained unsubstantiated.. Rather, circumstances have demanded that this assessee must not be allowed to go back on his own stand which he had taken at the time of search before the Revenue Authorities. Facts of the case have rather revealed that the retraction was only in respect of the amount of Rs. 6,25,700/-, as listed above but the said list do not contain the amount of Rs. 2,00,000/- in respect of unaccounted investment in shares. Therefore, the clauses of retraction do not cover at all the impugned addition of Rs. 2 lacs. This is also not the case of the assessee that no shares at all in the name of those four persons were ever purchased. Therefore under those specific circumstances the Revenue Department had no option but to assess the amount which was offered by the assessee himself. We find no fallacy in the said addition of Rs. 2 lacs, hence, confirm the same. This ground is, therefore, dismissed.
8. Apropos Ground No. 3, the observation of the AO was that in the statement assessee has accepted that the household expenditure was incurred in the range of Rs. 50,000/- to Rs. 60,000/-. By referring a case-law, the explanation of the assessee was accepted by the A.O. to the extent of household withdrawal shown by the assessee. However, it was found that there was an investment of Rs. 45,000/- in marble. Once an investment was witnessed by the Search Party and the assessee had not furnished any source of the said investment then a deponent must not be excused of his own offer. On hearing the submissions of both the sides, even in respect of this amount we have noticed that no supporting evidence either about the source or about the non-existence of the said asset was placed from the side of the assessee, therefore, the addition is hereby affirmed and this ground of the assessee is dismissed.

9. Apropos Ground No. 4, the observation of the AO was that while explaining the cash of Rs.45,700/- found at the time of search the assessee has explained that a sum of Rs. 20,120/- was received from en-cash ment of N.S.C. taken during the A.Y. 1989-90. Regarding balance amount, the explanation of the assessee was that it was a savings out of the withdrawals as a partner. The assessee was asked to furnish the evidence but no proof of such withdrawal from the capital account in the Firm was rendered therefore after granting a part relief, a sum of Rs. 20,000/- was taxed. The statement of the assessee was specific that the cash found during the course of search was not recorded in the books of account. Rather, he has stated that the said cash was out of his unaccounted income and there was no entry in the books of account. The only explanation of the assessee that out of the said sum an amount of Rs. 20,120/- was out of the en-cash ment of N.S.C. taken during the AY 1989-90 of the block period. That explanation of the assessee was accepted by the AO and the balance Rs.20,000/- was taxed. According to us, the AO was justified in granting the relief in respect of the encashment amount of NSC and the balance amount was rightly taxed in the block assessment, admittedly which remained unexplained. Rather this ground is not seriously contested, therefore, we hereby confirm the addition and this ground is dismissed.

10. Apropos Ground No. 5, the observation of the AO was that the assessee has admitted in his statement about the payment of on-money of Rs. 2,90,000/- on purchase of residential flats. The contention of the assessee was that the amount which was paid through cheque was reasonable and as per the prevailing market rate when it was booked in the year 1993. An addition of Rs. 2,90,000/- was made which is now contested before us.

10.1. Argument of ld. AR is primarily two folds, first, that the assessee had already retracted the said statement therefore the said statement was wrongly relied upon as also made the basis of the impugned addition. This argument of the assessee about the admissibility of retraction has already been dealt with by us in the foregoing paragraphs and we have already held that in the absence of any evidence to demonstrate that the retraction was necessitated; that too on the basis of some circumstances, we have taken a view that such a retraction being general in nature was nothing but a bald retraction and therefore has no force in the eyes of law. Ld. AR’s second plank of argument is that no addition under Chapter XIV B be made merely on the basis of a statement. It was argued that in the absence of any incriminating material no addition is warranted in block assessment.

10.1.1 We have considered this argument carefully. According to us, facts of the case have revealed that when the search party visited the assessee’s residential premises on 12/12/1995, it was found that the assessee was residing in a flat, therefore, on that very day in the following manner certain questions were asked:

“Q. 5.   Inform whether your family members are holding in their movable as well as immovable property or not?A.5 In the Abunagar Society, Nr.D. Cabin, my father is holding one building which was given on rented. My wife Savitaben is also holding one Apartment in Sumeru Apartment Block N: C-12.

My mother namely Diwaliben is also holding one Apartment Block No:B-5 at Sumeru Apartment, where I am living with her.

Q.6. You have purchased apartment in the name of your wife as well as you have also purchased one apartment in your mother’s name. Inform the purchasing cost individually.

A.6. In the Sumeru Apartment Block No: C-12 is in the name of Savitaben Kantilal. This block’s total cost of purchasing price is Rs. 3,25,000/- out of which Rs.2,00,000/- I have given by cheque and remaining amount of Rs. 1,25,000/- I have given by cash. In Block No: B-5, in Sumeru Apartment in the name of Diwaliben Chotalal. Its totl cost of purchasing price is Rs. 3,25,000/- out of which I have given it by cheque amount of Rs.2,00,000/- and remaining amount of Rs. 1,25,000/- I have given it by cash transaction. I have also given Rs.40,000/- cash for the Marble construction separately.

Q. 7. For Block No: B-5 and C-12 which you have given it by cash transaction worth of Rs.2,50,000/- (both the block) Whether you have made any entry in the books of A/c. or can you inform the money when you have paid by cash ?

A.7. In the year 1994 I have given the amount of Rs. 2,50,000/- in cash. This amount was not entered in the books of accounts. I have also not any evidence regarding the same. I have given this amount which are unaccounted income & I have no any other explanation over it. In the block I have constructed in the marble and its cost comes to Rs.40 to Rs.45 thousand. This cash transaction I have not accounted in the books of a/c. & there will be no entry of this amount. This income is also my income which are unaccounted income & no account in the books of account.”

10.2. Therefore, the evidence or the incriminating material was the asset itself i.e. flats. The evidences as physically present were the flats, which were very much found and detected by the Revenue Department. Only in consequence of search operation it had come to the knowledge of the Revenue Department that the assessee had bought two flats. It is therefore wrong on the part of the ld. AR to argue that there was no evidence was found at the time of search. In our opinion, presence of flats was a glaring and apparent evidence of presence of immovable asset which was found unrecorded in the books of accounts of the assessee. Next comes the question about the on-money and that too was accepted by the assessee himself. He was very specific about the mode and the manner of payments made i.e. a portion through cheques and rest portion of payment made in cash. This is not the case of the assessee that those flats did not exist at all or did not belong to the asses see. The existence of both the flats were not denied and it was accepted that in addition to the payment through cheques some amount was paid in cash which was admittedly not recorded in the books of account. Under those circumstances, when the declaration was specific and no ambiguity was left while making the said declaration, the AO had no option but to assess the same as undisclosed income.

10.3. The question of evidentiary value of a statement recorded u/s.132(4) of the Act is no more res integra. When an assessee had made a statement of facts, he can have no grievance if he is taxed in accordance with that statement. The reasonableness of the AO’s approach, as appreciated by us, is that he had not made any enhancement or substitution in the amounts as offered/ disclosed in the said statement. It was a statement pertaining to certain facts which were in the exclusive knowledge of the assessee. Those facts were disclosed to the Revenue Deptt. Thereupon those were accepted by the Revenue Department. Those facts were of such nature that there was no scope of existence of any other evidence. Affirmation of facts at best can only be done by the assessee in his own volition. If the assessee wanted to correct the said statement, then it was open for him to show the evidences to retract those facts. But no such evidence was furnished though an another chance was granted by this Tribunal while restoring the entire issues back to the assessment stage which means that the assessee had no evidence at all in his possession. We may like to clarify that the statute prescribes the power to the Revenue Authorities for recording a statement on the day of search operation. In this context, ld. AR has cited few decisions wherein there was a discussion of retraction of a statement or the legal sanctity of statement in the eyes of Income-tax Laws. We want to clarify that there is a difference in a statement recorded under the proceedings carried out u/s. 133A of the Act. As per section 133A(3)(iii) of the Act it enables the Authority to record the statement of any person, but it does not authorise to take any sworn statement. The Income-tax Act, wherever thought fit and necessary has conferred such powers to examine a person on oath. Those powers are therefore has been expressly provided. In this context Section 132(4) of the Act enables an authorised officer to examine a person on oath. Such a sworn statement made u/s.132(4) of the Act, thus can be used as an evidence under the Act. If we compare an another provision in this regard then the Income Tax Act prescribes issue of summons u/s.13 1 to a person concerned for his appearance and also for production of documents. This section, i.e. 13 1(1)(b) of the Act can enforce the attendance of any person as also to examine him on oath. But the law further says that a statement recorded u/s.13 1(1) after the issue of summons cannot be used as an evidence against the asses see. A statement recorded u/s. 131 of the Act has a far reaching consequence because if it is proved to be false which the assessee only knows or believes to be false or the assessee does not believe it to be true, then the consequence is that he shall be punishable under the Act and prosecution proceedings can be authorised.

10.4. In this regard, from the side of the Revenue an important decision of Honourable High Court of Chhattisgarh in the case of ACIT vs. Hukumchand Jain reported at 191 Taxman has been wherein and it was held that if an allegation of duress or coercion was made almost after two years, then such allegation has to be overruled.

10.5. In the light of the above detailed deliberations, we hereby draw a conclusion that in view of the confessional statement which was recorded on the date of search had evidentiary value, therefore, the existence of the on-money ought not to be ruled out. The confessional statement being recorded u/s. 132(4) of the I.T.Act and also being corroborated by the physical presence of flats, therefore, rightly relied upon by the Revenue authorities and correctly made the basis for the impugned addition of on-money. The retraction being general and vague, therefore, deserves to be ignored. We hereby confirm the addition and this ground is dismissed.

11. In the result, appeal of the Assessee is dismissed.

Order signed, dated and pronounced in the Court on 24th June, 2011.

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  1. S.L.Bansal says:

    During the course of income tax raid, I surrendered certain Kishan Vikas Patra with a undertaking that same may be used towards tax liabilities/tax dues.I have filed necessary revised returns for six years in persuant to the income tax raid.

    I also requested in the said income tax returns that Kishan Vikas Patras may be encashed and proceeds thereof may be adjusted towards tax dues. The income tax authorities have not done so yet.
    Kindly advice me/ inform me about certain case law which allows encashment of said Kishan Vikas Patras etc. for adjustment of tax liability.

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