Brief of the Case
ITAT Jaipur held In the case of ACIT vs. Shri Johari Lal Sodhani that the CIT (A) had given various reasons of retraction and also has considered the evidence for not honouring the statement made under section 132(4). The ld counsel of the revenue had not controverted the findings given by CIT (A). It is a legal proposition that statement recorded under section 132(4) has evidentiary value but is rebuttable presumption. The assessee has produced the evidence before CIT (A) and he came to the conclusion that addition made by the AO was not justified. The case laws referred by the assessee also support the assessee’s case. Therefore, we uphold the order of CIT (A).
Facts of the Case
Addition on account of unexplained advances
The assessee has income from salary and other sources. There was a search and seizure & survey action on the members of Sodhani Sweets Group on20.10.2009 of which the assessee is the most important member. During the course of search, cash, jewellery, stock-in-trade, valuables, documents, books of account and loose papers were found and seized from the premises of the members of the Sodhani Sweets Group of which one such member happens to be the assessee.
The assessee filed a return of income for the year under consideration on 27.10.2010 declaring total income of Rs. 1,09,99,050/-. The case was scrutinized under section 143(3). During the course of search, the assessee in his statement recorded on oath under section 132(4) on 20.10.2009 admitted to an undisclosed income which was advanced by him as loans through his relatives and acquaintances. The assessee stated that he has no account of the amounts of loans advanced to persons which according to him was done only on the basis faith and confidence of his close relatives as well as friends. This fact was again admitted by the assessee in reply to questionnaire in which he additionally stated that he has discussed the matter of surrender with his wife.
The assessee surrendered an amount of Rs. 34,60,400/- on account of the loans advanced to peoples as well as to cover up discrepancies found during the course of search. While examining the return of income for the year under consideration, it was noticed by the AO that assessee had disclosed only an amount of Rs. 5,36,063/- out of Rs. 34,60,400/-. After considering the assessee’s reply, the AO held that the assessee himself has re-affirmed the fact of surrender of Rs.34,60,400/-. Having re-affirmed the fact of advances of loans to people on more than one occasion including admitting the same in his statement recorded on oath under section 132(4), it is unfathomable as to why the assessee has not disclosed the impugned amount in his return of income.
The AO further relied on the decision in the case of Hotel Kiran vs. CIT, 82 ITD 453(Pune) wherein it was held that where statement under section 132(4) was voluntarily made and there was no coercion or threat whatsoever, the same would be binding on the assessee, even if subsequently retracted. In the instant case of the assessee, there has been instance of any threat or coercion which renders the statement of the assessee invalid. In case of Prasan Chand Surana vs. ACIT, 71 TTJ 466 it has been held that an admission, if clearly and unequivocally made is the best evidence against the party until the same is effectively rebutted with some conclusive evidence. He further relied on the decision in the case of Param Anand Builders Pvt. Ltd. vs. ACIT on statement recorded under section 132(4) and burden lies on the assessee to establish the statement was wrong. The AO finally made addition of Rs. 29,23,937/- to the income of the assessee.
Interest u/s 234B
The sole ground of the assessee is against charging of interest under section 234B without considering the adjustment of amount lying in P.D. Account. The assessee filed return on 27.10.2010 according to which the tax liability was worked out at Rs. 34,51,200/-. It was requested to adjust the amount from P.D.
account vide letter dated 27.10.2010. The adjustment was finally made on 06.12.2010. As per section 234B, the interest is chargeable in case assessee had not paid advance tax. In assessee’s case the total cash was seized at Rs. 98,45,770/-. The assessee had requested by letters dated 25.02.2010, 12.03.2010 and 23.03.2010 to adjust the cash against the advance tax liability. Again, at the time of filing of the return assessee also made request to adjust the self assessment tax of Rs. 34,51,200/- out of amount lying in P.D. account of CIT Central Jaipur. The AO, however, made adjustment on 06.12.2010. Thus interest on Rs. 34,51,200/- for the period from 1.4.2010 to 6.12.2010 i.e. for 9 months is not attributable to the assessee. This was due to delay on the part of the department in making the adjustment.
Contention of the Assessee
The ld counsel of the assessee supported the order of CIT (A). He further relied upon following decisions to support his contention that statement u/s 132 (4) is not conclusive and it can be retracted later by giving explanations supported by the material on record :- Pullangode Rubber Produce Co. Ltd. vs. State of Kerala and Another(1973) 91 ITR 18 (SC), Federal Bank Ltd. vs. State of Kerala, CIT vs. Ashok Kumar Jain (2014) 111 DTR 291/229 Taxman 65 (Raj.HC)(1995) 124 CTR 355 (Ker.HC), CIT vs. Ashok Kumar Soni (2007) 291 ITR 172 (Raj. HC), Kailashben Manharlal Chokshi vs. CIT(2010) 328 ITR 411 (Guj.HC), CIT vs. Dhingra Metal Works (2010) 328 ITR 384 (Del.HC), M. Narayanan & Bros. vs. ACIT (2011) 339 ITR 192 (Mad. HC), Jugal Kishore Garg vs. DCIT 34 Tax World 201 (JP), DCIT vs. Pramukh Builders (2008) 112 ITD 179 (Ahd. TM) and First Global Stock Broking (P) Ltd. vs. ACIT (2008) 115 TTJ 173 (Mum.) (Trib.).
Contention of Revenue
The ld counsel of the revenue supported the order of the AO and argued that statement recorded under section 132(4) is binding on the assessee. The CIT (A) was not right to accept the assessee’s retraction without any evidence and requested to confirm the order of the AO.
Held by CIT (A)
The CIT (A) allowed the appeal of the assessee. It was held that the assessee has made a surrender of incomes of total of Rs.2 Cr. including Rs. 34,60,400 on account of balance advanced on interest through relatives. Subsequently, by letter dated 01.12.2009 and 15.12.2009 submitted, income sought to be surrendered at Rs. 2,00,00,000/- was stated to be not correct. The correct income was determined at Rs. 96,15,124/-. Finally, such surrendered income was enhanced to Rs. 1,10,40,000/-.The difference between original disclosure of Rs. 2,00,00,000/- and the revised disclosure of Rs. 1,10,40,000/- was on account of two reasons. First, the cash surrendered at the time of search was Rs. 98,39,600/- which was subsequently reduced to Rs. 21,63,512/- which resulted into less disclosure of Rs. 76,76,080/-, because at the time of search the sale proceeds of sweets in respect of certain days before the search had not been considered at the time of search. The second reason was that this surrender of Rs. 34,60,400/- on account of undisclosed advances admitted during the course of search was retracted by stating that such surrender was obtained under duress in as much as no incriminating documents or any other corroborative documents were found and this surrender was obtained to make the total surrender of Rs.2,00,00,000/-.
CIT (A) further noted that while making this surrender, except the surrender of Rs.34.60 lacs the other items of surrender were based on specific incriminating documents of assets. The surrender of Rs.34.60 lacs which is stated to be on account of loan advanced through relatives etc. is definitely not specific in as much as no supporting details as to whom loan were advanced are on record. Even during the search also, no evidence of whatsoever nature were found which may indicate that such advances were genuinely made. Such corroborative facts give credence to the contention of the appellant as if surrender on account of advances through relative was recorded to round about the total disclosure of Rs.2 Cr. If genuinely such advances have been made, names of the relatives through loans are advances, person to whom amount have been advances or any other incriminating documents in the form of interest received/money advances would have been found or seized.
CIT (A) further held that the appellant has also shown certain additional income at his own while filing the return which has not been admitted earlier. Keeping in view the facts and circumstances CIT (A) held that prima facie there was no basis for making of such addition amounting to Rs. 2923937/- (3460400-536063) in as much as such addition is not supporting by any documentary or corroborative evidence. Therefore, the addition so made is deleted.
Held by ITAT
Addition on account of unexplained advances
ITAT held that the CIT (A) has decided the case categorically and assessee has not honoured the disclosure in the return because no incriminating documents were found during the course of search. The CIT (A) had given various reasons of retraction and also has considered the evidence for not honouring the statement made under section 132(4). The ld counsel of the revenue had not controverted the findings given by CIT (A). It is a legal proposition that statement recorded under section 132(4) has evidentiary value but is rebuttable presumption. The assessee has produced the evidence before CIT (A) and he came to the conclusion that addition made by the AO was not justified. The case laws referred by the assessee also support the assessee’s case. Therefore, we uphold the order of CIT (A). The Revenue’s appeal is dismissed.
Interest u/s 234B
The case laws referred by the assessee i.e. CIT vs. Arun Kapoor (2011) 334 ITR 351 (P&H), CIT vs. Ashok Kumar 334 ITR 355 (P&H),Satya Prakash Sharma vs. ACIT 20 DTR 561 (Delhi ITAT), Anand Shankar Mittal vs. DCIT 34 DTR 589 (JP) Vishwanath Khanna vs. Union of India & Ors. and (2011) 61 DTR 318 are squarely applicable. Therefore, interest charged under section 234B is not justified as assessee’s cash was lying with the department in P.D. account. The assessee had made request to adjust the advance tax from the cash seized and lying in P.D. Account, from time to time. Therefore, we allow the assessee’s Cross Objection.
Accordingly appeal of the revenue dismissed and cross objection of the assessee allowed.