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TMI Blog2014 (11) TMI 513X X X X Extracts X X X X X X X X Extracts X X X X ..... Company, Bombay. That plea however was not accepted and deduction was denied. The assessing officer relied upon a statement recorded from the Managing Director of the assessee company, during the course of search conducted in the year 1988 and took the view that the so- called payment of commission and brokerage to authorised dealer-firms was noting but a device to evade tax. For the assessment year 1985-86, claim for deduction under the same heading for a sum of Rs. 97,67,302/- was made. Here again, the assessing officer relied upon the statement recorded under Section 132(4) of the Act and disallowed the claim to the extent of Rs. 56,16,426/-. Against the order of the assessing officer for the two assessment years, two appeals were filed before the Commissioner of Income Tax (Appeals), Vijayawada. The Commissioner (Appeals) partly allowed the appeals and allowed deduction, to the extent of Rs. 76,76,463/- for the assessment year 1984-85 and Rs. 21,29,278/- over and above what was allowed by the assessing officer for the assessment year 1985-86. The Revenue, on the one hand and the assessee, on the other hand filed two appeals each, before the Hyderabad Bench A of the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the Revenue submits that the companies to which the respondent is said to have paid commission are nothing but name lenders and they are in fact the branches or establishments of the same family that owns and controls the respondent. He submits that through a specific amendment, the Parliament empowered the authorities under the Act, to rely upon the statement recorded during the course of a search of the premises of an assessee, not only in the proceedings pertaining to the block period, but also in relation to any other proceedings and that the amendment being clarificatory in nature would cover all the proceedings that were pending, by the time the statement was recorded. He further submits that Section 132(4) of the Act is purely procedural in nature and any amendment to it would date back to the origin of the provision. He has placed reliance upon the judgments of the Supreme Court in Commissioner of Wealth Tax v. Sharvan Kumar Swarup and Pooran Mal v. Director of Inspection 210 ITR 886. Sri Y. Ratnakar, learned counsel for the respondent, on the other hand, submits that the search took place in the year 1988 and the assessment orders in question are referable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led dealers, are none other than the puppet establishments of the respondent. For the assessment year 1984-85, he totally disallowed the claim, and for 1985-86, he allowed the claim in part. In the appeals preferred by the assessee, the Commissioner granted substantial relief. He expressed the view that the statement recorded in the search conducted in the subsequent years cannot constitute the basis to disallow the deduction. In the further appeals preferred by the department, on the one hand and the asseessee, on the other hand, initially there was a difference of opinion. Therefore the appeal was listed before a third member. Ultimately, the majority view was in favour of the assessee. The gist of the reference as sought by the department is as to whether the explanation added to Section 132(4) of the Act can be said to be retrospective or prospective in nature. If it is held that the explanation is retrospective in operation, the second question that arises, in view of the observation made by the Honble Supreme Court is as to whether on merits, the statement recorded under Section 132 of the Act could constitute proper evidence to support the conclusion arrived at by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of rights stand accrued to the accused. He may take advantage of any inconsistency in the F.I.R at a later stage or can attack the very authenticity of the F.I.R if it is filed with unexplained delay. The examples can be multiplied. The effort is only to demonstrate that there hardly exists a universal test, which can yield a result vis--vis the classification of the provisions of the enactment. Similar examples can be culled out from the Code of Civil Procedure, and other enactments. Even while leaning towards the principle that amendment to a provision which is procedural in nature can be taken as retrospective, the Courts have been cautious. For example, in Sharvan Kumar Swarups case (1 supra) after referring to Indian and English precedents on the subject, the Supreme Court observed: No suitor has any vested interest in the course of procedure, nor any right to complain, if during the litigation the procedure is changed, provided, of course, that no injustice is done. It is true that if one traces any substantive right back far enough it will be found secreted in the interstices of procedure. (Emphasis is of ours) The distinction between the charging provision on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t liable to be shut out. We are therefore of the view that the effect of explanation to Section 132(4) of the Act is that the assessing officer can rely upon it in respect of pending proceedings also, as a piece of evidence, but not as the sole basis for imposing additional financial liability upon an assessee either in the form of denial of benefits which an assessee is otherwise entitled to, or subjecting him to prosecution. To be more precise, if there exists any other supportive material, the statement recorded under Section 132(4) can certainly be taken aid of. Conversely, in the absence of other supporting material, a statement of that nature cannot constitute the basis to burden an assessee. The second question which is referable to the observation of the Honble Supreme Court, namely, whether the statement recorded under Section 132(4) in the instant case would constitute valid evidence is equally important. In a way, it stood answered in the preceding paragraph. However, to be more clear we express the view that even in relation to the very block assessment, a statement referable to Section 132(4), but retracted by the person cannot constitute the sole basis. It can be re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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