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TMI Blog2013 (6) TMI 723X X X X Extracts X X X X X X X X Extracts X X X X ..... e placed by the Assessing Officer in the case of Kunhambu (V.) and Sons Vs. CIT [1996] 219 ITR 0235 involved the valuation of stock and the valuation of a cinema theatre whereas the addition in the value of stock was upheld, the addition made on account of unexplained investment in the case of cinema theatre was deleted. In this judgment, there is no adjudication regarding retraction of statement. It is further observed that the search in this case was conducted because the assessee could not furnish the details of opening stock. In fact the Hon'ble High Court observed that "on the other hand, it was found that the search was resorted to only because of the failure of the assessee to produce the opening stock inventory. Shri Raman and a writer of the firm were examined in this connection on July 16, 1981, about nine days before the search. The search was conducted only when it was found that there was no chance of getting the opening stock inventory". Whereas in the case of Mrs. Aanisa Batool GHani Vs. ACIT, C.C. 18, New Delhi [2008] 21 SOT 323 (Delhi), the addition was sustained because the assessee could not explain the credit entries pertaining to cash deposits in the bank. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es - Whether, therefore, Tribunal was Justified in deleting addition -Held, yes" The Hon'ble Madras High Court in the case of M. Narayanan & Bros. Vs. ACIT, Special Investigation Circle, Salem [2011] 13 taxmann.com 49 (Mad.) has held that "Whether when assessee had explained his statement as not correct in context of materials produced, amount of Rs. 4 lakhs could be added to assessee's income on basis of his statement - held, no". Similarly, in the case of ACIT Vs. Jorawar Singh M. Rathod [2005] 148 taxman 35 (Ahd.) (Mag.), it has been held by ITAT, Ahmedabad 'B' Bench that "addition made by the Assessing Officer merely on the basis of retracted statement u/s 132(4) could not be sustained in the absence of any evidence, material or recovery of any movable or immovable assets at the time of search to corroborate the disclosure made by the assessee. " Further, reliance is being placed on the following decisions : i) Kailashben Mangarlal Chokshi Vs. CIT [2008] 174 Taxmann 466 (Guj.) / (2008) 14 DTR 257 (Guj.) ii) Arun Kumar Bhansali Vs. DCIT [2006] 10 SOT 46 (Bang.) (URO) iii) Shree Chand Soni Vs. DCIT [2006] 101 ITJ (JD) 1028 iv) Rajesh Jain Vs. DCIT [200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argument of the Assessing Officer that two neutral witness were present to oversee the search proceedings. It is my view that such a issue shall not go to determine whether the assessee can retract the statement or not, for the fact remains that the surrendered income has to be quantified on the basis of the incriminating material found during the search or on the basis of any other evidence collected during the assessment proceedings. Neither in the assessment proceedings nor in the remand report has any such quantification of concealed income has taken place. 3.12 The further argument given by the Assessing Officer that huge cash was found from the premises does not imply that it can form the basis of making an addition without any evidence. If the expenditure on advertisement was unvouched as stated in the remand report then the amount of unvouched expenditure can be made the basis of addition in the hands of the person to whom the advertisement pertains but it cannot be made the basis for making estimated addition in the hands of all the persons in the said group. The Assessing Officer in the remand report has further stated that the appellant had made earnings from specula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 CTR 218 wherein it has been held that "It is well settled that admissions constitute best price of evidence because admission are self-harming statements made by the maker believing it to be based on truth. It is well known that no one will tell a lie especially harming one's own interest unless such a statement is true." 3. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in law as well as in facts in ignoring the fact that the assessee has not filed any evidence in the present case which could prove that the statement was made under any threat or coercion. For the retraction to be valid, threat or coercion has to be proved. 4. The order of Ld. CIT(A) is perverse in law and on facts. 5. The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal." 4. While pleading on behalf of the revenue, the ld. DR relied on the order of Assessing Officer and also submitted that the statement recorded during the search operation has evidentiary value as held by Hon'ble Supreme Court in the case of Surjeet Singh Chhabra vs. UOI in SLP(C) No.14028/96 that revenue officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the search operation which could support the statement recorded during the search operation for making disclosure of Rs. 15 crores and utilization thereof. The authorized officer had not worked out undisclosed income on the basis of documents/assets found and seized during the search operation. No question was asked about the papers seized as per panchnama. The statement of doing Vaida Trading in past 8 months only itself suggests that the statement was far from truth. Nothing has borne out of the facts of the case. All these things were based on the hearsay. Ld. AR pleaded that no addition can be made merely on the basis of surrender without any existence of corroborative evidence found or seized during the search operation. No material even was gathered in post search inquiries to disprove the retraction by assessee. Ld. AR also relied on case laws. In the case of Kailashben Mangarlal Chokshi vs. CIT - [2008] 174 Taxman 466 (Guj.) or (2008) 14 DTR 257 (Guj.), the Hon'ble Court held that merely on the basis of admission, the assessee could not have been subject to additions, unless and until some corroborative evidence is found in support of such admission. Further, stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... izure and survey operation which are later retracted had been considered as not serving any useful purpose. The Apex Body, CBDT, had also warned the revenue officers not to obtain confession to the undisclosed income, rather concentrate on collection of evidence of income which lead to information on what has not been disclosed or is not likely to be disclosed by the Income-tax authorities. Thus, confession without any incriminating or credible evidence is useless. Ld. AR pleaded to sustain the order of CIT (A) and dismiss revenue's appeal. 6. We have heard both the sides on the issue. We have also perused the records available. The return was filed by the assessee declaring income of Rs. 5,88,06,735/- which included an amount of Rs. 12,85,777/- on account of undisclosed investment in jewellery and amount of Rs. 24,86,000/- on account of cash found during the search. The assessee has not included the amount of Rs. 15 crores which was surrendered u/s 132(4) of the Act. This amount was added back to the income of the assessee by the Assessing Officer. This statement recorded u/s 132(4) on 22.11.2006 was retracted by the assessee on 28.11.2006. As per the statement, this amount was e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income-tax Department. Similarly, while recording statement during the course of search & seizure and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, Assessing officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders." In the assessee's case also, this admission of additional income is not based upon any credible evidence and the same has been retracted within 6 days from the search. Non-asking any question regarding seized papers/documents from the premises of the assessee clearly shows that there was no focus and consideration of the search party on the collection of evidence of income which lead to information on what has been disclosed or is not likely to be disclosed before the revenue authorities. There is no evidence found an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment has been made to the tune of Rs. 15 crores and such income has been utilized or invested as stated by the assessee in the retracted statement. Nothing of such sort borne out of the facts. In our considered view, no addition can be made merely on the basis of surrender without existence of any corroborative evidence found against the assessee. For this propositions, reliance is placed on the following case laws :- "a. Kailashben Mangarlal Chokshi Vs CIT (2008) 174 Taxmann 466 (Guj.) / (2008) 14 DTR 257 (Guj.) Merely on the basis admission, the assessee could not have been subjected to additions, unless and until some corroborative evidence was found in support of such admission. Further statement recorded at such odd hours (at midnight) could not be considered to be voluntary statement, it was subsequently retracted and necessary evidence was led contrary to such admission. Addition was deleted. b. Arun Kumar Bhansali Vs DCIT (2006) 10 SOT 46 (Bang) (URO) Block period 1990-91 to 1999-2000 - Whether while computing undisclosed income of assessee, Assessing Officer should take cognizance of such correct income as depicted in books of account as well as in seized mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct evidence or if such evidence is not available the assessee can always point out to circumstantial evidence supporting the claim. Thus, statement recorded under section 132(4) cannot be made use for purpose of precluding assessee from claiming expenditure for earning income which assessee forgot to claim while making statement disclosing income. c. Ganga Saran & Sons (P) Ltd. Vs ITO (1981) 130 ITR 1 (SC) : ITO Vs Nawab Mir Barkat AU Khan Bahadur (1974) 97 ITR 239 (SC) Belief should not be arbitrary or irrational but based on relevant and material reasons. d. S. Narayanappa Vs CIT (1967) 63 ITR 219 (SC) Belief must be in good faith, and cannot merely be a pretence. e. Madhya Pradesh Industries Ltd. Vs ITO (1970) 77 ITR 268 (SC) Absence of evidence to prove existence of ITO's belief that income has escaped assessment, will invalidate reassessment. f. Mayank Poddar (HUF) Vs WTO (2003) 181 CTR (Cat) 362 If in law an item is not taxable, no amount of admission or misapprehension can make it taxable. The taxability or the authority to impose tax is independent of admission. Neither there can be any waiver of the right by the assessee. The Department cannot rely ..... X X X X Extracts X X X X X X X X Extracts X X X X
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