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CHETNABEN J SHAH LEGAL HEIR OF JAGDISHCHANDRA K. SHAH Versus THE INCOME TAX OFFICER, WARD 10 (3) OR HIS SUCCESSOR TO

Addition towards probable speculation income - Held that:- We are of the view that the CIT (Appeals) has rightly appreciated the case based on the sound principles of law and has also considered the statement made by the assessee at the relevant point of time. We are of the view that in light of the observations made by this Court in the case of Kailashben Manharlal Chokshi v. Commissioner of Income-tax (2008 (9) TMI 525 - GUJARAT HIGH COURT ), mere speculation cannot be a ground for addition of .....

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E FOR THE RESPONDENT : MRS MAUNA M BHATT, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. By way of this Appeal, the Appellant - assessee has challenged the judgment and order dated 09.03.2007 of the Income Tax Appellate Tribunal, Ahmedabad Bench 'D', Ahmedabad in ITA No.352/Ahd/1999 for the Assessment Year : 1994-95 whereby the Tribunal has reversed the findings of CIT (Appeals) and confirmed the order of the Assessing Officer. 2. While admitting the matter on 27.03.2 .....

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returns of income was filed which was processed by the Income-tax department where opportunity was granted to the assessee and ultimately order u/s. 143(4) of the Income tax was framed wherein several additions and/or disallowances were made. One of the major additions made by the Assessing Officer was in respect of alleged unexplained income from speculation business in shares at a figure of ₹ 10,50,000/- earned over a period of several years based on tentative and qualified disclosure. .....

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from time to time as also various decisions of this Court which are detailed hereunder :- Circular No. F.No.286/2/2003-IT (In) dated 10.03.2003. Relevant part reads as under :- It is, therefore, advised 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 Departments. Similarly, while recording statement during the course of search it seizures and survey op .....

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y avoid obtaining admission of undisclosed income under coercion/undue influence. 3. In view of the above, while reiterating the aforesaid guidelines of the Board, I am directed to convey that any instance of undue influence/coercion in the recording of the statement during Search/Survey/Other proceeding under the I.T. Act, 1961 and/or recording a disclosure of undisclosed income under undue pressure/coercion shall be viewed by the Board adversely. The decision of this Court in the case of Kaila .....

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ible evidence, are later retracted by the concerned assessee while filing returns of income. In these circumstances, confessions during the course of search and seizure and survey operations do not serve any useful purpose. This instruction further states that it is, therefore, advised 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. Similar .....

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he Act. Despite the fact that the said statement was later on retracted no evidence has been led by the Revenue authority. We are, therefore, of the view that merely on the basis of admission the assessee could not have been subjected to such additions unless and until, some corroborative evidence is found in support of such admission. We are also of the view that from the statement recorded at such odd hours cannot be considered to be a voluntary statement, if it is subsequently retracted and n .....

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llant has taken us to the relevant findings of the Assessing Officer which are reproduced herein below :- In this connection the assessee was requested to explain as to under what circumstances he has not made included the above concealed income in his return of income filed for the A.Y. 1994-95. To this, it is explained by the assessee that his statement u/s. 132(4) was recorded under pressure and he was forced to make disclosure on account of concealed income as well as the unaccounted investm .....

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.Y.'s which has been taxed while passing the order for Assessment in earlier years. The arguments and explanations of the assessee are not accepted because his statement u/s 132(4) of the Act was recorded voluntarily without replying any coercive measures by the search authorities and therefore now he cannot say that statement was recorded under pressure. The statement recorded u/s. 132(4) of the Act during the course of search as evidential value and the admission made by the assessee in hi .....

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first statement are normally treated as acceptably. Apparently, there is no reason for any authorized person to pressurise the assessee for disclosure and it is a settled position as per evidence acts done by the public officer in discharge of his duties are bonafide and if anybody alleges otherwise, heavy bonus lies on him to establish the same. Apart from making self serving statement, the assessee has brought no facts, evidence, or details on records to establish the correctness of the conten .....

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rect evidence is available matters are to be decided on the basis of prepronderance of probabilities. The Hon'ble Supreme Court in the case of Sumati Dayal has largely relied on test of human probabilities in testing that case. In two other decisions the Hon'ble ITAT, Bombay Bench third member has reported at 205 ITR 52 and 209 IT at page no.1 has also relied on the time tested test of human probabilities in concluding those cases. In the present case, any person or ordinary prudence wou .....

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ng the course of search proceedings and specifically to the statement No.(9) which reads as under :- (9) Over and above this, approximately ₹ 10,50,000/- is earned from the trading of shares in different shares which are not recorded in the books of accounts. It is submitted that the CIT (Appeals) while considering the appeal has taken into account all the relevant details and held at Paragraph 24 as under :- 24. It is a normal presumption that statement under section 132(4) is given volun .....

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mentioned in the statement itself, the point will still remain since it is no body's case to get say any extra tax then is due. The reality remains that there is no evidence what-so-ever with the department even in consequence of a serious action like search and seizure followed by detailed security which could support the earning of speculation income of ₹ 10,50,000/- in this year. In other words, there is no evidence to support the very existence of this income except the so called .....

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