TMI Blog2011 (5) TMI 928X X X X Extracts X X X X X X X X Extracts X X X X ..... ive in nature. In brief, the assessee has pleaded that during the course of search, jewellery of 4682.33 grams was found which belongs to various family members. As per the books of account, jewellery should be7012.56 grams. In the books, jewellery against the name of assessee was shown at 343.79 grams but nothing was found at the time of search. Learned CIT(Appeals) observed that this much jewellery must have been sold by the assessee and a capital gain would be leviable upon the assessee. He directed the Assessing Officer to verify this aspect and ascertain the market value of the jewellery as on the date of the search and after allowing indexation for the cost of jewellery capital gain would be assessable in the hands of the assessee. Learned CIT(Appeals) further directed the Assessing Officer to carry out this exercise in respect of other family members. The assessee is aggrieved with this direction. 3.1 The next grievance of the assessee is that at the time of search, cash of ₹ 18,99,640 was found at the residence and ₹ 3,50,000 recovered from the locker belonging to Shri Sushil Aggarwal. Apart from these two amounts, there is balance of ₹ 3,70,854 from di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sclosed business income in his hands. In this letter, assessee has put a condition that the surrender would be subject to verification of seized material. Assessing Officer passed the assessment order on 30.12.2007. He determined the taxable income of the assessee at R.1,80,39,960. Assessing Officer has observed in the assessment order that assessee failed to return the income admitted by him during the course of search, hence, an addition of ₹ 1,75,00,000 has to be made in the hands of the assessee. Assessing Officer found that assessee failed to explain the source of the cash found at the time of search but he did not deem it necessary to make separate addition because addition of ₹ 1,75,00,000 would take care of the cash available at the residence. Assessing Officer further found a gift of ₹ 2,50,000 received from the HUF. According to the Assessing Officer, HUF does not fall within the ambit of exclusion of relatives provided in section 56(2(v) of the Income-tax Act, 1961. He made the addition of ₹ 2,50,000 also. 5. On appeal, Learned CIT(Appeals) has deleted the addition of ₹ 1.75 crores on the ground that Assessing Officer has not made a refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as, and his desire to come clean at the first, second and third instances and avoid facing the wrath of the law. Basically, assessee has not retracted his statements rather while filing the return, he did not offer the amounts surrendered for taxation. This stand of the assessee is after thought. For buttressing his contentions, he relied upon the order of the ITAT in the case of Overseas Chinese Culsine (India) Pvt. Ltd. Vs. DCIT(Assessment) reported in 218 ITR (AT) 80. 8. The learned counsel for the assessee submitted that no addition on the basis of alleged disclosure statement made under sec. 132(4) of the Act can be made. He pointed out that it is not ascertainable whether authorized officer had signed the statement at the end, the statement does not indicate the names and designation of the officer who recorded the statement. When assessee made the statement he was not having old income-tax returns, relevant details, documents and books of accounts. The assessee is an old illiterate Halwai and does not understand the intricacies of the tax matters. The statement does not bear the signatures of the witnesses. On the strength of Hon'ble Gujarat High Court s decision in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als as well as three business concerns. Therefore, possibility of cash belonging to the business concern, available at the residence cannot be ruled out. The cash found at the residence was not more than recorded in the books of business concerns. No addition ought to have been confirmed by the Learned CIT(Appeals). Similarly, he pointed out that jewellery not found in the possession of each individuals ought to have not been considered as sold. The jewellery in the books of account was more than the one found at the time of search. 11. We have duly considered the rival contentions and gone through the record carefully. Assessing Officer has reproduced the question and the reply of the assessee given on 10.11.2005/11.11.2005 as well as 21.11.2005 in English Vernacular. Both these questions and replies have a direct bearing on the controversy hence it is imperative to take note of these questions and replies which read as under: 10-10/11/2005 S.13 Do you want to say anything else Ans: I, Bhatirath s/o Shri Shiv Narain hereby declare additional income of ₹ 1 crore for current financial year 05-06 on account of documents, jewellery, cash property found during action ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of the statement given by him under sec. 132(4) of the Act or not, it is salutary upon us to take note of subsection (4) of section 132 of the Act also which read as under: (4). The authorized officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act. Explanation.- For the removal of doubts, it is hereby declared that the examination of any person under this sub-section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income-tax Act, 1922 ( 11 of 1922 ), or under this Act . 14. With the assistance of learned representatives, we have gone through the statements carefully. The first objection of the assessee is that statements are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be kept in mind that in law even retracted confession may form the legal basis of the addition, if the Assessing Officer is satisfied that it was true and was voluntarily made. But basing the addition on a retracted declaration solely would not be safe. It is not strict rule of law but is only a rule of prudence. As a general rule of practice, it is unsafe to rely upon a retracted confession without corroborative evidence. In the present case, assessee was found in possession of unexplained cash, jewellery, books and documents, hence authorized officer has rightly recorded his statement under sec. 132(4) of the Act. The statement made before the officer is an admissible evidence. There is no dispute with regard to this proposition. The sole question before us is whether the statement is sufficient to make the addition or not. As observed above, as a general rule of prudence, it is unsafe to rely upon a retracted confession and judicial as well as quasi-judicial authorities ought to look for corroborative evidence. In the light of this position of law, if he examines the facts of the present case, then it would reveal that assessee fail to bring any evidence on the record which can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) has observed that this amount be considered as part of the cash balance as per books. Assessing Officer has made the addition simply for the reasons that HUF does not fall within the exclusion provided in sec. 56(2)(v) of the Act which only relates to the blood relatives. We find that out of the two HUFs, one who has given gifts to the assessee was consisted his wife, two sons and one daughter, the other HUF, namely, Shiv Narain Aggarwal comprises of father, mother and two brothers. They are all relatives. The assessee had made a declaration of ₹ 1.75 crores, we have restored this addition. We direct the Assessing Officer to grant a telescoping benefit of ₹ 2,50,000 also against the declaration. No separate addition deserves to be made. Similarly, in the case of assessee, no separate addition has to be made on account of shortage of jewellery because the declaration of ₹ 1.75 crores can take care of non-availability of the jewellery which is otherwise disclosed in the books of account. 17. In the result, the order of the Learned CIT(Appeals) is set aside and that of the Assessing Officer is restored subject to certain changes mentioned above. The appeal of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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