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TMI Blog2015 (10) TMI 2012X X X X Extracts X X X X X X X X Extracts X X X X ..... his ground of appeal taken by the Revenue is inter-connected with the solitary ground of appeal taken by the assessee in his appeal. The assessee has pleaded that though he has disclosed an income of Rs. 2 crores in the return of income, but, on the basis of material considered during the course of assessment proceedings, the addition could not exceed Rs. 99.30 lakhs, therefore, the CIT(A) has erred in confirming the addition of Rs. 2 crores. The CIT(A) ought to have restricted the addition to Rs. 99.30 lakhs. 3. In the CO, the assessee has not taken any independent ground of appeal. The CO has been filed in support of the CIT(A)'s finding. Thus, the issues agitated in both the appeals as well as in the CO are common. 4. Brief facts of the case are that the search and seizure operation under section 132 of the Income Tax Act was carried out at the residential premises of the assessee on 26.7.2006. The assessee is a member related to Colourtex Group of Surat. The assessee is the head of the group. He has filed his return of income on 27.3.2008 declaring total income at Rs. 55,61,352/-. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t deem it necessary to elaborately deal with this issue at this stage. 6. The main controversy in this appeal relates to the disclosure made by the assessee during the course of search. According to the AO, the assessee has made a disclosure of Rs. 10 crores, in his statement recorded under section 132(4). His income deserves to be assessed by making addition of this Rs. 10 crores. He further observed that assessment in the case of other group concerns has been made where the additions have been made. Since, Shri Jayantilal Jariwala claimed himself as head of the group and also owned the addition made in the case of other family members/group entities, therefore, sufficient material for corroboration is also available. The ld.AO has produced the details in tabular form on page no.9 of the assessment order. He pointed out that total addition of Rs. 8,89,57,186/- has been made in the hands of different individual as well as companies. Telescoping of this addition is being granted to the assessee, against the disclosed income of Rs. 10 crores. 7. On appeal, the ld.First Appellate Tribunal has recorded a finding that out of the alleged addition of Rs. 8,89,57,186/- made by the AO in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 132(4) had fallen for consideration before various authorities on a number of occasions. All the authorities i.e. Hon'ble High Courts, ITAT etc. are unanimous in their approach while propounding meaning of section 132(4) of the Act, that mere disclosure would not be sufficient to put any assessee with tax liability. The adjudicator would seek corroboration with other material for putting any assessee under the tax liability on the basis of such disclosure. He took us through the finding of the CIT(A), and also made reference to the Circular of the CBDT No.286/2/2003 whereby the Board has appraised its officers not to take confession without collecting the material for supporting such confession. In support of his contention, he relied upon the following decisions: i) CIT Vs. Chandrakumar Jethmal Kochar, 55 taxmann.com 292 (Guj); ii) ACIT Vs. Harekrishna Exports, ITA No.961/Ahd/2009; iii) ACIT Vs. Jorawar Singh M. Rathod, 148 TAXMANN 35 (Ahd); iv) DCIT Vs. Pramukh Builders, 112 ITD 179 (Ahd)(TM); v) Kailashben Manharlal Chokshi Vs. CIT, 220 CTR (Guj) 138; vi) Shri Narendra B. Sanchawala, ITA No.222/Ahd/2002; vii) Dhanvarsha Builders & Developers P. Ltd. Vs. DCIT, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under: Question No.33 and its reply showing disclosure "Question No.33: In reference to the issues raised in Q.No.1 to Q.32 about you, your family members, business companies and partnership firms, do you want to state any additional thing about the taxes for the same ? Answer No.33: Yes, I am making voluntary disclosure today of Rs. 10 crores of income because of our companies, firms are managed by me through my employees and because of that my employees or any other persons might have committed mistakes which is quite possible and considering that voluntary disclosure is made by me and I shall pay the tax on this time. Besides on this voluntary disclosure further information such as item wise, assessee-wise assessment year-wise, detailed information, I shall present in 10 days time, which may please be accepted." Extract of letter dated 18.9.2006: "The reference to the subject mailer, on September 15, 2006 evening, last remaining prohibitory on far at our individual premises wax revoked and a statement of Shri Jayantibhai was recorded when before concluding the said statement voluntary disclosure and surrendering of income of Rs. 10,00,00,000 (Rupees ten crores only) was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be added into the computation of income of the current financial year of Shri Jayantilal Thakordas Jariwala who is the head of the family, subject to examination, verification and evaluation of the seized materials, impounded records and such other documents as may be available, found and identified, as the case may be. while filing the return of income. 3. In all humility, it is the case of Colourtex group of companies that all expenses deductions and other claims made by them are genuine and admissible at law and therefore the amount of voluntary disclosure referred to herein above has not been specifically identified in reference to any expenses, discrepancies or assets. We hope the information and explanation provided in the foregoing paragraphs along with the relevant enclosures shall be amply self explanatory, however, should your honour require any further information or explanation in this regard, we shall be pleased to provide on hearing from your end." ......... The appellant has submitted that in the return of income a specific note was made in reference to the disclosure of income, therein it was written that "scrutiny and preliminary review of all the group asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest are good evidence, but they are not conclusive, and a party is always at liberty to withdraw the admission by demonstrating that they are either mistaken or untrue. In law, the retracted confession even may form the legal basis of admission, if the AO is satisfied that it was true and was voluntarily made. But the basing the addition on a retracted declaration solely would not be safe. It is not a strict rule of law, but only rule of prudence. As a general rule, it is unsafe to rely upon a retracted confession without corroborative evidence. Due to this grey situation, CBDT has issued Circular No.286/2/2003 prohibiting the departmental officials from taking confession in the search. The board is of the view that often the officials used to obtain confessions from the assessee and stop further recovery of the material. Such confessions have been retracted and then the addition could not withstand the scrutiny of the higher appellate authority, because no material was found supporting such addition. Keeping in view, the above broad principle, let us examine the disclosure made by the assessee and his retraction. 13. The ld.First Appellate Authority has placed reliance on the ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence. We are, therefore, of the view that the Tribunal was not justified in making addition of Rs. 6 lakhs on the basis of statement recorded by the Assessing Officer under section 132(4) of the Act. The Tribunal has committed an error in ignoring the retraction made by the assessee. 27. In the above view of the matter, addition of Rs. 1 lakh made on account of unaccounted cash is confirmed and the addition of Rs. 6 lakhs is hereby deleted." This decision has been followed by the Hon'ble High Court in the case of CIT Vs. Chandrakumar Jethmal Kochar, 55 taxmann.com 292 (Guj). The Hon'ble High Court has reproduced the discussion made by the Tribunal, and thereafter, concurred with the conclusions of the Tribunal by observing as under: "6. In view of the above discussion and considering the principal laid down in the case of Kailashben Manharlal Chokshi (supra),we are of the considered opinion that the view taken by the Tribunal is just and proper. We are not convinced with the submissions made by Mr. Mehta, learned advocate for the appellant that the Tribunal has not given cogent reasons. Therefore, the answer to the first question would be against the Revenue and in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be owned by Shri Jayantilal Jariwala. He reproduced the details of addition in a tabular form at page no.4 of the assessment order. But the ld.CIT(A) has observed that after reappreciation of the appellate proceedings, most of these additions have been deleted. The additions are confirmed to the extent of Rs. 99,30,782/-. Most of these orders narrated in the table at page no.4 of the CIT(A)'s order are being confirmed by the Tribunal also. Along with these appeals, we have heard some 32 more appeals of the group concerns. We have upheld the orders of the CIT(A) in separate orders. We have duly dealt with the issue of additions made in individual hands independently, as dealt by the CIT(A) and most of the additions stands deleted. Thus, the attempt of the AO to draw corroboration from those additions is also not sustainable. Inspite of search, the department was unable to lay its hand on the material exhibiting unexplained income in the hands of the assessee to the extent of Rs. 10 crores. Therefore, in view of the above facts and circumstances, we are of the opinion that the ld.CIT(A) has appreciated the controversy in right perspective and no interference is called for in the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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