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TMI Blog2009 (8) TMI 823X X X X Extracts X X X X X X X X Extracts X X X X ..... er on oath during the search operations. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the principle of law laid down by the Kerala High Court in V. Kunhambu and Sons v. CIT [1996] 219 ITR 235 did not apply to the present case ?" 3. The assessments were made in pursuance of notice under section 158BC of the Income-tax Act, 1961 (for short "the Act") on all these assessees and the Revenue has impugned the order of the Income-tax Appellate Tribunal (for short "the Tribunal") confirming the order of the Commissioner of Income-tax (Appeals) on common ground and common substantial question of law. 4. Briefly stated the facts of the case are that search and seizure operations in the business premises and residential premises of the above assessees were conducted between February 21, 2002, and February 23, 2002. In the course of search, statement of Hukum Chand Jain, head of the family and father of the other assessees, was recorded under section 132(4). He surrendered Rs. 30 lakhs as undisclosed income for the block period and offered that whatever taxes are worked out in the surrendered income, they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered by the disclosure offered in individual cases, if taken cumulatively at Rs. 5,57,500. It observed that the admission though an extremely important piece of evidence but it cannot be said that it is conclusive and it was open to the assessee to show that it was incorrect. Since the statement under section 132(4) was rebuttable and the same was explained by the assessee at a later stage, there is no infirmity in the orders of the Commissioner of Income-tax (Appeals). 6. Shri Rajeshwara Rao, learned counsel for the appellant/Revenue, vehemently argued that the close examination of the statement recorded under section 132(4) would reveal that the same was clear, categorical and unconditional. The head of the family, Shri Hukum Chand Jain, voluntarily came forward with the offer of Rs. 30 lakhs against the cash amounting to Rs. 2,00,961, gold jewellery worth Rs. 20,58,420 and several loose papers found during search. The other three assessees, his sons, countersigned the statement of their father in evidence of their agreement to the statement. The assessee also assured to pay the entire tax against the offered undisclosed income and some tax was also paid against the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Commissioner of Income-tax (Appeals) and the Tribunal in allowing set off undisclosed income offered by the assessee against the assessment made by the Assessing Officer on the basis of specific material is also perverse. The undisclosed income in the block return was offered against the assessment year 2002-03 whereas specific additions were made in the assessment year prior to the year 2002-03, which is evident from the orders of assessments. 8. It was finally argued that the judgments relied upon by the respondents/ assessees are distinguishable on facts, as in the cited judgments, the admission of the assessee was not so clear and categorical and retraction was made within reasonable time and based on corroborative material, which has not been done in the present case. 9. Reliance is placed in the matters of V. Kunhambu and Sons v. CIT [1996] 219 ITR 235 (Ker) ; Ramjas Nawal v. CIT [2003] 131 Taxman 525 (Raj) ; Ravindra D. Trivedi v. CIT [2008] 215 CTR (Raj) 313 and Hiralal Maganlal and Co. v. Deputy CIT [2005] 96 ITD 113 (Mum). 10. On the other hand, Shri Kishore Bhaduri, learned counsel for the respondents/assessees submitted that though the responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Hukumchand Jain 3,52,000 2,75,854 1,22,146 7,50,000 3,98,000 3,52,000 Ashok Kumar Jain 15,000 1,09,432 6,40,568 7,50,000 7,50,000 15,000 Lalit Kumar Jain 45,500 1,97,068 5,07,462 7,50,000 74,500 45,500 Kamalchand Jain 1,45,000 24,600 5,80,400 7,50,000 6,05,000 1,45,000 Specific addition details Name of -assessee Gold Household goods Shares Building Expenses based on loose paper Total Hukumchand Jain 115075 24700 - - 1,36,079 2,75,854 Ashok Kumar Jain - 20700 500 - 88,232 1,09,432 Lalit Kumar Jain - 24600 - - - 24,600 Kamalchand Jain - - - 154,243 42,825 1,97,068 15. The Assessing Officer after making specific additions under the various heads as detailed above, over and above the undisclosed income declared by the assessee, further observed that during the search and seizure proceeding, the assessee was unable to explain various transactions and loose papers found and not entered in the books of account. Cash amounting to Rs. 2,00,961, gold valuing at Rs. 20,58,420 and silver utensils valuing at Rs.2,50,649, etc., were also found. Over and above the loose papers, cash of Rs. 1,50,000, gold of Rs. 8,45,837 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of material found in the course of search works out to less than the amount disclosed, then such lesser income should be assessed, as that income is to be taxed which the assessee has actually earned and, accordingly, directed the Assessing Officer to accept the returned income of each assessee and deleted the additions made by the Assessing Officer. The Tribunal also dismissed the appeal of the Revenue and confirmed the order of the Commissioner of Income-tax (Appeals). 17. Legal submissions on behalf of the appellant/Revenue 18. These appeals have been admitted on first three substantial questions of law proposed by the appellant in the memo of appeals. We propose to first deal with the substantial question of law- Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the principle of law laid down by the Kerala High Court in V. Kunhambu and Sons' case [1996] 219 ITR 235 (Ker) did not apply to the present case ? 19. The core issue involved in these appeals is the circumstances in which the assessee may be allowed to retract his statement recorded on oath under section 132(4) of the Act during search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court observed that the assessee admits that he is disclosing undisclosed income at his free will and without any threat and expresses his inability to submit any documentary evidence during search proceedings, the subsequent contention of the assessee that the income found during the search proceedings is genuine is an afterthought and cannot be accepted. 23. In the matter of Hiralal Maganlal and Co.'s case [2005] 96 ITD 113 (Mum), during the search proceedings in relation to block assessment, certain sheets indicating the details of stock of the assessee-firm were seized. The chief accountant of the firm admitted that the said stock represented unaccounted stock and offered the same as additional income. The partner as well as the chief accountant certified that the statements under section 132(4) were made voluntarily. The assessee did not retract from his statement for a period of six months though fully aware of the statement made by him. The Bombay High Court did not accept the contention of the assessee that the aforesaid statements were forcibly recorded with an observation that the assessee has not produced any contemporaneous record or evidence, oral or document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SC), the question before the Supreme Court was-whether the entries in the account books treating a portion of the general expenditure as expenses towards immature plants and capitalizing such portion amount to an admission that the amount in question was laid out or expended for the cultivation, upkeep or maintenance of immature plants from which no agricultural income was derived during the previous year for the purpose of the provisions of the Kerala Agricultural Income-tax Act, 1950, was used as conclusive evidence against the assessee and it was held that though it suggest admission and such admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the assessee who made the admission to show that it is incorrect and the assessee should be given a proper opportunity to show that the books of account do not disclose the correct state of facts. 26. In the matter of Chuharmal's case [1988] 172 ITR 250 (SC), the Assessing Officer on search of the bedroom of the assessee found the watches and the same were seized. The Department held that the assessee was the owner. The High Court, relying upon section 110 of the Evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... illingness to pay the taxes worked out against the surrendered undisclosed income. He further stated that he is surrendering the income to avoid the dispute with the Income-tax Department and for mental peace. The assessee, Hukum Chand Jain, has further stated that he is signing his statement after regarding and understanding the same without any coercion and the same has been further countersigned by his three sons/respondents-assessees. It is also not in dispute that the assessee did not retract their statements imme- diately after the search and seizure was over. In the return also, no explanation was offered for their surrender of undisclosed income of Rs. 30 lakhs at the time of search and seizure operations under section 132(4). The allegation of duress and coercion was made for the first time in the year 2004, i.e., after almost two years when the Assessing Officer confronted them with their statements under section 132(4) and they were asked to explain as to how the above undisclosed income does not find place in their return. The Department's contention that there were no mitigating circumstances to show the admission/surrender made by the assessee was retracted at the ear ..... X X X X Extracts X X X X X X X X Extracts X X X X
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