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2005 (4) TMI 244 - ITAT AHMEDABAD-BAddition for unrecorded sales - Search And Seizure u/s 132 - Income derives from manufacturing and sale of sweets - unexplained cash, bank deposits and investment in shares - statement recorded u/s 132(4) - Whether unrecorded sale itself is income or only a net profit on such unrecorded sale is the income, would depend upon the facts of each case - Deletion of GP addition - HELD THAT:- It is a settled law that admission by a person is good piece of evidence though not conclusive and the same can be used against the person who makes it. The reason behind this is a person making a statement stops the opposite party from making further investigation. More over under the Income-tax Act the Legislature itself has provided that the statement given u/s 132(4) can be used against the person giving such statement. Therefore, the statement u/s 132(4) is an important piece of evidence against the assessee. However, the statement is not conclusive and the person giving the statement can retract the same under certain circumstances (i) The first circumstance is where the statement is not given voluntarily but it was obtained under coercion, threat or undue influence. But the burden is upon the person making the statement to prove that the statement given by him was not voluntary. The assessee can discharge this burden by giving a direct evidence of coercion or threat by the Authorised Officer or by circumstantial evidence in this regard. The time gap between the statement and the retraction of statement would also one of the important points to be taken into account while deciding whether the statement was voluntary or not. (ii) The other circumstance is where the statement was given under the mistaken belief of either fact or law. Here again the burden is upon the person giving the statement to prove that the statement given by him was factually incorrect or was untenable in law. Thus, we have already held that the statement given by Shri K.B. Kandoi was voluntary and there were corroborative evidences to support such statement, therefore, how the above sum of Rs. 24 lakhs was utilised or invested by the partners of the firm, is irrelevant and since no separate addition has been made for any such investment in gold ornaments, stock, furniture, renovation, sundry debtors, loans and advances to relatives, etc., we do not find it necessary to examine the assessee's contention with regard to the above investments/expenditure. n the case under consideration before us it is nowhere the claim of the assessee that any purchase or expenditure was not recorded in the books of account. The cash found at the time of search at Rs. 3,95,000 was explained to be out of unrecorded sale. This clearly shows that the entire unrecorded sale was income of the assessee because had part of the unrecorded sale been utilised for incurring any expenditure, the cash would not have been available. Moreover in the case under consideration before us the addition of Rs. 24 lakhs by the Assessing Officer is not made for unrecorded sale but the addition is made of the amount disclosed by Shri K.B. Kandoi at the time of search. Thus, we have held that the disclosure was voluntary and it is also corroborated with the evidence found at the time of search. We therefore reverse the order of the CIT(A) on this point and uphold the addition. However, while disposing of Ground No. 1 of Revenue's appeal, we have upheld the order of the Assessing Officer with regard to the addition which was made by him on the basis of disclosure made by Shri K.B. Kandoi in the case of the assessee-firm, therefore, no addition is required to be made in the hands of Shri K.B. Kandoi. We therefore allow Ground No. 2 of Revenue's appeal. Deletion of GP addition - While disposing of Ground No. 1 of Revenue's appeal we have sustained the addition made by the Assessing Officer on the basis of statement of Shri K.B. Kandoi. After considering the sum, the GP of the assessee would be more than 50% which is much more than the GP rate applied by the Assessing Officer. Therefore, there is no justification for sustaining any addition on account of low GP. We therefore reject Ground No. 3 of Revenue's appeal. In the result, appeal is partly allowed.
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