TMI Blog2005 (9) TMI 245X X X X Extracts X X X X X X X X Extracts X X X X ..... gistered firm and is running a nursing home in the name of Bali Nursing Home. It had four partners, namely, Dr. RK.Bali, Dr. Rajinder Bali, Dr. Abha Bali, and Dr. Veena Bali. A search and seizure operation under s. 132 of the IT Act, 1961 was carried out at the business premises of the assessee at B-2/B-3,D.B. Gupta Road,New Delhion12th Jan., 1998. During the course of search, certain incriminating documents were found. Statements of three partners were also recorded on 12th and13th Jan., 1998. On the basis of the incriminating documents, the AO made addition of Rs. 71,097 on account of undisclosed income. He also made addition of Rs. 42,33,686 on account of the undisclosed income for the block period. Thus, total undisclosed income was worked out at Rs. 43,04,783 for the block period. In appeal, the learned CIT(A) deleted the additions. The Revenue has challenged the deletion of additions in this appeal. 5. Ground NO.1: During the course of search, Annex. A-89 was seized from the premises of the assessee. It contained some small chits on which certain amounts were mentioned. Details of such papers with serial numbers have been given at pp. 2 and 3 of the assessment order. The ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0th April, 1998. In this regard, reference was made to the relevant entries in the ledger. Similarly, explanation was furnished about the amount of Rs. 2,250 and Rs. 1,440 and it was submitted that these loose papers pertained to Dr. RK.Bali. Regarding the amount of Rs. 21,159, it was explained that a bill amounting to Rs. 28,320 pertained to Punjab Timber Traders and payment of this amount was made by cheque which is reflected in the bank account of the assessee. 5.2. About the figure of Rs. 25,248 also it was explained that it pertained to Hari Chand Bhagt Ram and these bills were paid through cheques, which have been duly reflected in the bank account. The learned CIT(A) found the explanation of the assessee fully convincing and deleted the addition by observing as under: "I have examined the explanation with reference to evidence contained in paper book and I find that the explanation of the assessee is correct and there is no reason to make addition of Rs. 71,097 in the hands of the appellant i.e., M/s Bali Medical Dental Centre. Accordingly, the addition of Rs. 71,097 is deleted." 5.3. The learned Departmental Representative has challenged the findings of the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en made in the following manner: ---------------------------------------------- Financial Amount Amount Receipts Year as per considering suppressed Books the previous (Rs.) (Rs.) column to be 75% (Rs.) ---------------------------------------------- 1995-96 44,51,651 58,02,200 13,50,549 ---------------------------------------------- 1996-97 53,72,180 71,62,904 17,90,724 ---------------------------------------------- 1997-98 32,80,235 43,73,648 10,92,413 (till DOS) ---------------------------------------------- 6.2. In appeal, the learned CIT(A) considered the statements of the partners, recorded at the time of search and the written submissions of the assessee, which have been reproduced in the appellate order and deleted the addition. It is to be pointed out that the main contention of the assessee before the learned CIT(A) was that the so-called admission of the partners was neither natural nor voluntary as the statements were recorded under duress and coercion and mental pressure. For this purpose, various reasons were advanced which were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceipts/income for the last 10 years to an amount of Rs. 80,00,000 (eighty lakhs), myself. my husband, Dr. Veena Bali and Dr. Rajinder Bali admit that there is a concealment of income on account of undisclosed professional receipt outside the regular books of account and offer the same amount of Rs. 80 lakhs for taxation in our hand in individual capacity and in the hand of the firms. I also undertake to pay the taxes due on the amount. I also hereby state that the undisclosed income of Rs. 80 lakhs has been invested in the purchase and renovation of property No. 20B/2, D.B. Gupta Road, New Delhi, purchase of flat Nos. 1A and 1B White House, Bhagwan Das Road, New Delhi, renovation of nursing home premises 20B/2, D.B. Gupta Road, New Delhi, unaccounted loans including an amount of Rs. 16 lakh app. to Mrs. Usha Bhaumik, E-13, East of Kailash, New Delhi, foreign gift of an amount of US $ 18000. Undisclosed investment in stock of medicine found at M/s Balis Medicos Chemist and any other property or loan or advance or expenditure incurred by me for last 10 years upto the date of search, including the cash found at my/our residence 20B/2 and residence of my mother-in-law Mrs. Vidyawati Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ister-inlaw Smt. Abha Bali and kindly correlate the abovesaid undisclosed income with its investment. A. About 25 per cent of the professional receipt are being earmarked outside the books of account by the above mentioned four persons and firms every year for the last 10 years. After calcu1ating the total unaccounted receipts/income for the last 10 years at an amount of Rs. 80,00,000 (eighty 1akhs), myself my husband Sh. Rajinder Bali, my brother-in-law Shri RK. Bali, my sister-in-law Smt. Abha Bali admit that there is a concealment of income on account of undisclosed professional receipt outside the regular books of account and offer the same amount of Rs. 80,00,000 (eighty lacs) for taxation in our hand in individual capacity and in the hand of the firms. I also undertake to pay the taxes due on the amount. I also hereby state that the undisclosed income of Rs. 80 lakhs has been invested in the purchase and renovation of property No. 20B/2,D.E. Gupta Road,New Delhipurchase of flat Nos. 1A and 1B White House,Bhagwan Das Road,New Delhi. renovation of Nursing Home Premises 20B/2, D.B. Gupta Road, New Delhi, unaccounted loans including an amount of Rs. 16lakh app. to Mrs. Usha Bha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission is stated to be not only on behalf of firms but also in his individual capacity. It is therefore, out of question to rely on such alleged statements. Even proceedings against him under s. 158BC are invalid. (ii) That the alleged statements are vague, general and ambiguous and are contrary to the facts on record. It is clear from the alleged statements that no incriminating material was found at the recording of the alleged statements. All alleged figures are imaginary. Even one of the assessees was asked to state a uniform suppression of 25 per cent which on the facts of it is contrary. Further, as the facts will bear us out that what is stated about the alleged investments in various properties is without any material. Statement of Ms. Usha Bhaumik, landlady of E-13, East of Kailash, had been recorded. Similarly, in respect of foreign gifts, complete evidence is available and has been furnished. Cash found at various premises, has been fully explained to be out of the books. There is no fact which is not verifiable. Again the alleged figure of Rs. 80 lakhs as the alleged undisclosed income is totally imaginary and without any substantiating material. (iii) The invalidit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ok. These affidavits are as under: "I, Bishamber Singh Rana S/o Shri Surinder Singh Rana r/o Terrace, Nursing Home, D.B. Gupta Road, New Delhi, do hereby state on oath and solemnly affirm as under: That search was conducted by IT Department on 12th Jan., 1998 at the premises No. 20B/2, D.B. Gupta Road, Karol Bagh, New Delhi.That my services for being a witness, were asked by the search officer. That I was directed to remain present during the search. That circumstances which would have affected the prestige and reputation of Dr. RK.Baliwere so created that on13th Jan., 1998he had to sign a prepared statement. Dr. RK.Baliwas also pressurized to get the prepared statements signed from Dr. Abha Bali and Dr. Veena Bali." 6.8.1. The affidavit of Trilok Singh Rana contains a similar deposition. 6.9. In the written submissions before the learned CIT(A) it was further submitted that so far as the second portion of the statement relating to investment of money in property is concerned, a report of Valuation Cell was obtained by the AO and no undisclosed investment outside the books was found to have been made. It was pointed out that the AO even did not refer to the investigation ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was made by them in their statements. 6.13. In the context of the above material facts and circumstances, we have examined the entire aspect relating to the evidentiary value of the statements recorded by the AO and find ourselves in full agreement with the findings of the learned CIT(A) on this issue. For supporting his findings our reasons are as under: (1) On a close comparison of the three statements reproduced above, it is found that identical question, cast in identical language was put to them and the answers of all the three persons ware also in identical language, rather it appears to be verbatim repetition. These persons have disclosed the same percentage of suppression of professional receipts i.e., 25 per cent. They have also uniformly disclosed the figure of Rs. 80 lacs on account of unaccounted receipts/income for last ten years and they have also disclosed that this amount of undisclosed income of Rs. 80 lacs was invested in the renovation of property No. 20B/3B D.B. Gupta Road, purchase of flat Nos. 1A, 1B, White House, Bhagwan Das Road, Mandi House, renovation of nursing home 20B/3B D.B. Gupta Road, etc. These persons were professional, having high qualif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place but at several places. Therefore, it cannot be said that mistake was by chance or otherwise. This aspect also creates doubt about the genuineness of the whole thing and supports the contention of the learned counsel for the assessee that the statements were not voluntary. (3) As per the statement, suppressed income on account of professional receipts of all the partners has been disclosed. The statement of Dr. Rajinder Kumar Bali has not been recorded. Hence, no disclosure on (his) behalf could be made. From the statements reproduced above, it is found that each person has disclosed income on behalf of other partners. It is settled legal position that the statement of one person cannot bind the other. As per the application dt.29th Jan., 1998, reproduced above, Dr. RK.Baliretracted the confession by saying that the statements of his family members recorded during the course of search were not voluntary nor under free will and were recorded under duress. The circumstances under which the pressure was built up upon him have been explained in the letter dt.19th Jan., 2000, which has also been reproduced above. Besides, the witnesses namely, Bishamber Singh Rana and Trilok Sing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome worked out on the basis of the statements of the above three partners is not corroborated or substantiated. In view of the above, it cannot be said that the statements were genuine or voluntary. (7) The AO has also considered the three documents, namely, Annex. A-26. These are loose slips, on which figures of cash on different dates are noted, details of which are as under: ------------------------------------------- Sl. Seized Document Date Amount No. Annexure page No. (as per Number document) (Rs.) ------------------------------------------- 1 A-26 55 09-12-97 5,000 ------------------------------------------- 2 -do- 54 08-1-98 5,000 ------------------------------------------- 3 -do- 52 08-1-98 10,000 ------------------------------------------- 4 -do- 22 08-1-98 10,000 ------------------------------------------- 5 -do- 21 05-1-98 10,000 ------------------------------------------- 6 A-6 11 15-12-97 10,000 ------------------------------------------- 6.14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the paper book and which is as under: "10th Jan., 2000 The Jt. CIT, Special Range-19, New Delhi. Re : Your QuestionnaireBaliMedical Dental Centre In your question No. 11 you have asked about advances received from various patients as shown at A-7 p. 29. We had replied that the same advances are deposited by patients on their own, sometimes for safe keeping and at other times to reduce the cash payable on settlement of the final bill. We had also stated that as the advances received are voluntary we record them only at the time of final payment of the bill. We would also draw your attention to seized documents Annex. A-8 page Nos. 61, 62, 66, 71, 72, 76, 86 and 91 in which the estimates of the bill shows that the said advances have been received as also the final amount of the estimate. This final estimate agrees with the bill raised by us on the concerned person. ------------------------------------------------- Name of Amount Annexure Amount Amount Amount Patient of of of of adv.on No.and advance chgs. final A-7 page in in bill p. 29 No. of final fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en reproduced above, it is found that suppression of professional receipts at 25 per cent has been calculated by the AO on the basis of statements of three doctors recorded during the course of search. Thus, it is clear that the addition has been made solely on the basis of the so-called admission of the three partners of the firm. 6.23. We have, therefore, to see as to whether the additions made on account of suppressed professional receipts can be sustained particularly when there is no corroborative material to substantiate such statements. To reiterate, neither there is any seized material nor documentary evidence to base or to support the addition as has been made by the AO in this case, nor any evidence of investment of undisclosed income has been found. Thus, except the admissions of the partners of the firm, which has been retracted subsequently there is no other material to corroborate these statements. 6.24. On the basis of the above, we have to decide as to whether the additions can be sustained in the present matter solely on the basis of the so-called admissions or not. As has been observed by us, there is no material to corroborate the so-called admission and on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of a citizen which may affect him/her mentally also, causing several other inconveniences, hardships, embarrassment and harassment. There is every likelihood of a statement tendered to or recorded by the search officers on the search day being incoherent or at variance with subsequent statements tendered to or recorded in any further or collateral proceedings, but to make addition to the returned income or to put such person to sufferance or to adverse consequence on such statement is not justified in law. All that is stated by any deponent on the search day should not be taken as the truth, the whole truth and nothing but the truth. Such statements indubitably have evidentiary value and credibility in law, but the same should be viewed with great caution, particularly when the same is denied, varied or retracted or established by the defendant to have been obtained or given under mental stress, coercion, undue influence or due to any other abnormal condition and circumstances when such statement was given. If a person at later stage retracts from the statement given on the search day, then the Court or Tribunal should try to ascertain the reasons or circumstances from such perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y no stretch of imagination be treated to be relatable to such evidence i.e., to the evidence 'found' as a result of search, inasmuch as, the statement recorded during search could not be said to be an evidence 'found' as a result of search though the same may be an evidence 'obtained' during search. After considering the amendment introduced in the provisions of s. 158BB(1) w.e.f.1st July, 1995, it was held that no addition on the basis of statement recorded during search could be made. 6.32. In the instant case it is to be observed that the statements recorded by the IT authorities are compelled testimony as held in the case of Nandini Satpathy VS. P.L. Dani AIR 1978 SC 1025. The Hon'ble Supreme Court in the aforesaid case has observed as under: "Compelled testimony must be read as evidence procured not merely by physical threats or violence but by psychic torture, atmospheric pressure, environmental coercion, tiring interrogative prolixity, overbearing and intimidatory methods and the like." 6.33. In the case of Jagdish Chand Gupta VS. Asstt. CIT (1996) 56 TTJ (Chd) 337 : (1996) 58 ITD 142 (Chd), the Chandigarh Bench of the Tribunal has observed that confessional statement ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
