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2016 (7) TMI 1212 - GUJARAT HIGH COURT

2016 (7) TMI 1212 - GUJARAT HIGH COURT - TMI - Additions on the basis of statement recorded u/s 131 - Tribunal deleted the additions - AO has rejected the retracted statement of the assessee with a reasoning that the same has been furnished after two months and the statement was recorded in the presence of assessee's Advocate and also the fact that the detailed breakup submitted by the assessee with respect to earning of income cannot be put into the mouth of the assessee and thereby additions w .....

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e name of the assessee. Thus the Revenue has not brought any evidence. The onus, in our opinion, is on the Revenue to prove that the assessee has earned the income. It gets shifted on the assessee once the assessee claims the exemption of income. - Additions were rightly deleted - Decided against the revenue. - TAX APPEAL NO. 207 of 2008 With TAX APPEAL NO. 208 of 2008 TO TAX APPEAL NO. 210 of 2008 - Dated:- 20-7-2016 - MR. KS JHAVERI AND MR. G.R.UDHWANI, JJ. FOR THE APPELLANT : MR NITIN K .....

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is of a statement recorded by the ADIT under Section 131 of the Income Tax Act. In the statement recorded, the assessee has admitted to have earned ₹ 1,79,00,000/- in cash on account of various projects. The details of the projects as well as breakup of the same has already been furnished by the assessee in the statement recorded. The utilization of these income has also been furnished by the assessee. However, after two months, the assessee has retracted from the statement giving the reas .....

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dditions and the Tribunal has confirmed the order passed by the CIT (A) which has given rise to this appeal. 3. While admitting these appeals, following question of law has arisen for consideration of this Court: Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the CIT (A) deleting the additions made by the Assessing Officer pursuant to the statement under Section 131 of the assessee which was subsequently retracted after three months? 4. Learned Coun .....

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retraction was nothing but an afterthought, the same should have been rejected and the order of the AO is required to be upheld by the Tribunal. 4.2 In support of his submissions, learned Counsel for the Department has relied upon a decision in case of Assistant Commissioner of Income Tax v. Hukum Chand Jain &Ors. (2011) 337 ITR 0238 and contended that the retraction should be made at the earliest opportunity and the same should be established by producing any contemporaneous record or evide .....

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ever, the assessee was not allowed to crossexamine the said statement. 5.1 Learned Counsel for the assessee has relied upon letter [F.No.286/98/2013IT (INV.II] dated 18/12/2014 whereby the instructions was issued in relation to Section 132, read with Section 133A of the Income Tax Act, 1961 with regard to search & seizure, admission of undisclosed income under coercion / pressure during the search / survey. The said circular reads thus: Instances / complaints of undue influence/coercion have .....

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ons show the Department as a whole and officers concerned in poor light. 2. I am further directed to invite your attention to the Instructions / Guidelines issued by CBDT from time to time, as referred above, through which the Board has emphasized upon the need to focus on gathering evidences during Search / Survey and to strictly 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 .....

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g under you in this regard. 6. This issues with approval of the Chairperson, CBDT. 5.2 He has also drawn attention of this Court to one letter dated 10/03/2003 issued by the Ministry of Finance & Company Affairs, Department of Revenue, Central Board of Direct Taxes in respect of confession of additional Income during the course of search and seizure and survey operation. The said circular reads thus: Instances have come to the notice of the Board where assessees have claimed that they have b .....

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ds to information on what has been disclosed or is not likely to be disclosed before the Income Tax Department. Similarly, while recording statement during the course of search it seizures 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 .....

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e made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to crossexamine, the Adjudicating Authority did not grant this opportunity to the a .....

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ny material which would not be in possession of the appellant themselves to explain as to why their exfactory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to crossexamine those dealers and what extraction the appellant wanted from them. 7. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the oppo .....

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ar Jethmal Kochar [2015] taxmann.com 292 (Gujarat) and contended that similar issue has cropped wherein this Hon'ble Court has held in favour of the assessee. 5.5 Learned Counsel has lastly contended that the findings recorded by the CIT (A) and Tribunal are just and proper and therefore the appeal may be dismissed by answering the issue in favour of the assessee and against the Department. 6. We have heard learned Counsel appearing for the respective parties. 7. Having gone through the orde .....

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ss it is not retracted. The assessee in this case has already retracted the statement which in our opinion is a valid retraction. Although there had been search in the case of Gokul Corporation and its partner Shri Suresh A Patel on which the Revenue has relied for making the additions in the case of the assessee but the Revenue could not bring any evidence or material except the statement of the assessee which was recorded on 8.1.96 and also the statements of Shri Subhash Pandey and Shri Kashya .....

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he onus, in our opinion, is on the Revenue to prove that the assessee has earned the income. It gets shifted on the assessee once the assessee claims the exemption of income. We therefore do not find any illegality or infirmity in the order of the CIT (A) in deleting the additions made by A.O. We therefore confirm the orders of the CIT (A) for AYs. 1991-92, 1992-93, 1993-94 and 1996-97. 8. The decision in case of Andaman Timber Industries (supra) is relevant for this purpose and the Apex Court h .....

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that the Tribunal has committed an error in allowing the appeal. He further submitted that the Tribunal has not given any cogent reasons in its order. 4. As against this, Mr. Soparkar, learned Senior counsel heavily relied upon the decision of this Court in the case of Kailashben Manharlal Chokshi Vs. Commissioner of Income Tax, reported in [2010] 328 ITR 411 (Guj.), more particularly paragraph No.23. In the aforesaid case, the judgment rendered in CIT Vs. D.L.F., reported in [2000] ITR 855 has .....

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disclosure was sought to be obtained from the assessee. So far as amount invested in house property is concerned, the assessee has specifically stated in his explanation dated 28.2.1989 that there was absolutely no basis for making the disclosure on account of bunglow at 68, Sarjan Society, Athwa Lines, Surat. It was in the year 1964 that the assessee took one Plot No.68 in Sarjan Co.Operative Housing Society which was also constructing the bunglow for which the assessee claimed to have been ma .....

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hat the cost of construction of first floor worked out to ₹ 2,06,060/- . There was, therefore, no reason for making addition of ₹ 4 lacs on the basis of alleged disclosure made by the assessee in his statement recorded under Section 132(4) of the Act. In support of this statement the Revenue has not brought any evidence whatsoever which would establish that the assessee had in fact incurred an amount of ₹ 4 lacs on the construction of the first floor and that amount was investe .....

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duced by the Assessing Officer in his assessment order which says that during the course of search and seizure proceeding, statement of assessee's wife, Smt. Kailashben Chokshi was recorded and according to which she had received about 25 tolas of gold each from her parents and from her parents in law side at the time of her marriage in the year 1960. She had given 15 tolas of gold ornaments to her daughter Ritaben at the time of her marriage in the month of March, 1988. If the total jewelle .....

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dition could have been justified on that count. So far as addition of ₹ 1 lac on account of unaccounted investment in furniture is concerned, it is stated by the assessee that on the ground floor furniture was made before 15 years and assessee had spent ₹ 25,000/- for renovation after making withdrawal from the firm's account. It is further submitted that the furniture on the first floor was partly received and paid out of withdrawals from the firm. At the time of the search addi .....

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e parties and perused the material available on record. The Tribunal while deciding the appeal in paragraph No.8 has observed as under: 8. We have heard the assessees counsel and the D.R. We are of the opinion that the CIT(A) when he relied upon the statement of the assessee made on 8.8.90 ignored the fact that there were two statements recorded on that day. The first statement was recorded at the 8 am. and second statement was recorded at 8:45 pm. in the night. In the first statement recorded i .....

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ing. In this first statement in the morning there is no acceptance of any benamidari or any disclosure. It is notable that the second statement of the assessee started at 8:45 pm. which according to the assessee continued upto 6 am. next day. This is contained from pages 13 to 26 of the paper book and contains 35 questions and answers. Till question No.21 of the second statement there is no allegation of any benamidari. From question No.22 the statement starts talking about proprietorship of dif .....

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he concerns mentioned in question No.22 are his benami concerns. In answer to question No.26 he accepted that certain bank accounts were his benami bank accounts. In answer to question No.27 he further agreed that all the deposits made in the name of his employees are his deposits. In answer to question No.33 he disclosed an income of ₹ 15 lakhs. He could not give any further details on that date. On 31.8.90 another statement of this assessee was recorded. In that he accepted that he was a .....

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irst statement made in the morning of 8.8.90 this assessee did not disclosure any benamidari and it was only in the second statement taken from 8:45 pm. onwards that he disclosed certain benamidaris and proceeded make certain disclosure. It is notable that the disclosure. Made in answer to question No.12 appearing on assessees paper book page No.32 in the statement given on 31.8.90 talks about disclosure of 24 lakhs in 14 concerns as group disclosure. The issue regarding group disclosure has nei .....

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