TMI Blog2015 (10) TMI 2012X X X X Extracts X X X X X X X X Extracts X X X X ..... ence with the Revenue in support of that addition, but, the moment the assessee has re-affirmed the disclosure of ₹ 2 crores, it becomes an absolute evidence. This disclosure was made after due deliberation and consultation with the tax consultant. Therefore, there is no mistake of facts or misconception about the law on this amount. The ld.First Appellate Authority has rightly confirmed the addition to this extent. - Decided against assessee and revenue. - ITA No.2456/Ahd/2009, ITA No.2616/Ahd/2009, CO No.239/Ahd/2009 - - - Dated:- 16-9-2015 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER For The Revenue by : Smt.Vibha Bhalla, CIT-DR For The Assessee by : Shri Sanjay Kapadia with Shri Ankur D. Shah ORDER PER RAJPAL YADAV, JUDICIAL MEMBER: Assessee and the Revenue are in cross-appeals against the order of the CIT(A)-II dated 17.6.2009 passed for the Asstt.Year 2007-08. On receipt of notice in the Revenue s appeal, the assessee has filed cross-objection also bearing No.239/Ahd/2009. 2. The grounds of the appeal taken by the Revenue are not in consonance with the Rule 8 of Income-Tax (Appellate) Tribunal Rules. In bri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for any source of income, and the assessee offers no explanation or the explanation offered by him is not, in the opinion of the AO, satisfactory, the excess amount may be deemed to be the income of the assessee for such financial year. The ld.AO further observed that section 69A postulates three conditions viz. (a) the assessee is found to be owner of the money, (b) money is not recorded in the books of accounts, if any maintained, and (c) the explanation about the nature and source of acquisition of money offered by the assessee, is not in the opinion of the AO satisfactory. Then such money or value of bullion jewellery etc. would be treated as an income of assessee. He, accordingly, rejected the explanation of the assessee and made addition of ₹ 12,36,880/-. 5. On appeal, the CIT(A) has deleted this addition by observing that in the case of M/s.Bhavin Fashion, Surat who is a member of the group having PAN : AACFB 6356 J was also surveyed. A deficit of ₹ 7,84,980/- was found in the cash book of this firm. The explanation of the assessee was that the cash had been taken at the residence of the partners/directors/ family members of other concerns. The ld.First Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... along with return be ignored and his assessable income be restricted to ₹ 99,30,782/-. This plea of the assessee has been rejected by the ld.First Appellate Authority for two reasons, viz. (a) that the assessee has made a disclosure at the time of search, which on filing of the return, he reaffirmed at ₹ 2 crores. This re-affirmation in the form of note appended with the return depicts that the assessee has consciously accepted the disclosure of ₹ 2 crores, therefore, the income of the assessee cannot be brought down from this ₹ 2 crores. 8. Before us, the ld.DR contended that any statement of disclosure made under section 132(4) of the Income Tax Act, then such statement is an admissible evidence, and the assessee cannot take a U turn from the disclosure voluntarily made by him. She further contended that along with return, the assessee has appended a note wherein, he has contended that in case his income by way of additions made by the AO exceeds ₹ 2 crores, then, his disclosure may also be accepted upto that amount. This type of conditional retraction would suggest that the assessee has not actually retracted his statement made during the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 11. A bare perusal of section would reveal that it empowers the authorized officer to examine during the course of search or seizure any person on oath. The disclosure made during the statement recorded under this section will be admitted in the evidence can be used against the assessee in the proceeding. Before, we embark upon an inquiry on the facts of the present case so as to find out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents, loose papers, transactions etc., forming pert of the impounded material or even found, impounded, seized or identified from any other sources, records etc. as also to cover any claims, expenses, deductions, discrepancies in inventory, investments, assets found in its present form as the case may be, in the case of any of the assesses, companies, concerns, firms or partners or relatives or employees or sister concerns / associate concerns of our group. This voluntary disclosure of income may kindly be worked out on logical and judicious interpretation, of the definition of income under the Act and as per the normally accepted, interpreted, implemented and understood principles of income commercial parlance as also based on the judicial pronouncements of various authorities on the subject matter....... . The extract of letter dtd. 30-10-20.06 was as under: In continuation of our earlier submission dated September 16, 2006 referring to the preliminary voluntary disclosure and surrendering of income of ₹ 10,00,00,000 (Rupees ten crores only) We have to state as follows. 1. The aforesaid-preliminary voluntary disclosure of income, was made with a view to avoid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y conditional disclosure made is at present reduced while computing the total income only for the purpose of registering the claim. However, during the course of assessment / appellate / revision proceedings of any of the assessees of the Colourtex Group covered during the search / survey proceedings, if any disallowances of expenses, deductions, errors, omissions -in the books of accounts, other documents, loose papers, transactions etc. forming part of the impounded material or from any other sources, records etc. is made to the returned income without taking into account the disclosure of assesses, either due to disallowance of expenses or deduction or otherwise then to the extent of disclosure made by the assessee, the addition be telescoped irrespective of the head of income against the disclosure and no separate addition be made again in the hands of respective assessees. Further, the tax remaining refundable in relation to surplus amount of disclosure be ultimately refunded to Shri Jayantilal Thakordas Jariwala after, determining the income of all the assessees on a logical basis as per normally accepted, interpreted, implemented and understood principles of income in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not have any reason for retracting from the disclosure. The ld.First Appellate Authority concurred with the AO and confirmed the addition of ₹ 7 lakhs to his income. The Tribunal has also confirmed the addition by observing that there was nothing on record which indicated that the disclosure was taken from the assessee under duress, pressure or coercion. The retraction after lapse of two months from the date of disclosure by the assessee was considered as after-thought. The issue travelled before the Hon ble High Court. The Hon ble High Court has deleted the addition by observing that merely on the basis of disclosure, addition cannot be made. There should be some corroborative material. The following observations in para-26 of the judgement of Hon ble Court are worth to note. It reads as under: 26. In view of what has been stated hereinabove we are of the view that this explanation seems to be more convincing, has not been considered by the authorities below and additions were made and/or confirmed merely on the basis of statement recorded under section 132(4) of the Act. Despite the fact that the said statement was later on retracted no evidence has been led by the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions of the Hon ble High Court as well as of the Tribunal is to the effect that the addition ought not to be made in the hands of the assessee, merely on the disclosure statement made under section 132(4) OF THE Income Tax. The statement has to be seen in the context of facts found in the course of search, and later on it is to be interpreted reasonably by considering the material collected by the Revenue. 15. In the light of the above, let us examine the statement of the assessee along with explanation in letter dated 18.9.2006 written immediately after three days of search, letter dated 30.10.2006 and the note appended along with the return. While dealing with such type of circumstances, one has to keep in mind that there would be a perceptional difference between the intellectual compatibility of trained team of IRS officers, vis- -vis a business-man who might be happened to be a semi-literate fellow and atmosphere during the course of search. The assessee has disclosed that companies/firms are maintained by him through his employees, and because of that, his employees or other persons might have committed mistake. It is quite possible, and therefore, he made disclosure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered the rival contentions of the ld. Representatives. The facts of the case of the assessee are quite distinguishable. The assessee has made a disclosure of ₹ 10 crores during the course of search. While filing of the return, on verification of all the materials, he re-affirmed his disclosure at ₹ 2 crores. His admission during the course of search, coupled with the re-affirmation at the time of filing of return, would denude him to say that disclosure was under misconception of facts, because, he was not supplied the seized material. This disclosure was made after the perusal of evidence. Therefore, he cannot say there is no evidence against the assessee for assessing the income of ₹ 2 crores. As discussed, earlier statement made under section 132(4) is admissible evidence. We have upheld the findings of the CIT(A) for deletion of ₹ 8 crores on the ground that there was no corroborative evidence with the Revenue in support of that addition, but, the moment the assessee has re-affirmed the disclosure of ₹ 2 crores, it becomes an absolute evidence. This disclosure was made after due deliberation and consultation with the tax consultant. Therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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