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ACTO, Anti Evasion-I, Alwar. Versus Khandelwal Foods Products, Rajasthan Tax Board, Ajmer

2016 (10) TMI 1010 - RAJASTHAN HIGH COURT

Imposition of penalty u/s 77(8) of the Rajasthan Sales Tax Act, 1994 - excess physical stock found, than what was recorded in books - the stock of Namkeen on spot verification was 6422 kg whereas in the books it was weighted at 3892 kg only and, therefore, there was excess stock of 2530 kg - Held that: - the assessee failed to discharge the onus immediately as soon as the survey took place and the onus as noticed earlier was to bring to the notice of the higher officials of the Revenue, if somet .....

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d and imposed, is mala fide, perverse, based on no evidence, misreading of evidence or which a reasonable man could not form or that the person concerned was not given due opportunity, resulting in prejudice, said proceedings need no interference. - Penalty upheld - petition allowed - decided in favor of Revenue. - S.B. Sales Tax Revision Petition No. 99/2009 - Dated:- 3-10-2016 - Jainendra Kumar Ranka, J. For the Petitioner : Tanvi Sahai, Meenal Ghiya For the Respondent : Surendra Singh ORD .....

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the stock of Namkeen on spot verification was 6422 kg whereas in the books it was weighted at 3892 kg only and, therefore, there was excess stock of 2530 kg. A show cause notice was given, however, the respondent assessee filed a reply on the spot stating therein that he accepts the excess stock and he has no explanation to offer and that appropriate order be passed. Taking into consideration the aforesaid explanation the officers concerned imposed penalty u/s 77(8) of the Rajasthan Sales Tax A .....

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and further appeal filed by the Revenue before Tax Board also resulted in dismissal of the appeal upholding the order of Dy. Com. (Appeals). 4. Learned counsel for the petitioner vehemently contended that on the day of survey, excess stock was found and there was no explanation offered and there is no allegation about coercion or pressure on the assessee, which has not been proved at all, and it is a mere allegation not supported by any material or evidence. Learned counsel contended that thoug .....

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explanation was offered before the Dy. Com. (Appeals) that the so-called two witnesses are the employees/workers of the assessee and had it been so, such an additional affidavit placed before the Dy. Com. (Appeals) ought not to have been accepted without seeking explanation from the AO. She also contended that the officers of the Anti Evasion Wing have taken due precautions of R.50 of the Rules, and the finding of the Tax Board so also of the Dy. Com. (Appeals) is perverse and require to be int .....

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e employees/workers of the respondent assessee and they could not be said to be independent witnesses, and thus supported the order of both the Appellate Authorities and also contended that it is a finding of fact. 6. I have considered the arguments advanced by the learned counsel for the parties and perused the impugned order so also the other orders on record and the record of Assessing Officer in particular, and in my view the orders of Tax Board and Dy. Com. (Appeals) are required to be inte .....

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ounsel for the respondent was unable to provide copy of the so-called affidavit, which appeared to have been placed before the Dy. Com. (Appeals) and the Tax Board, though the matter was adjourned for quite number of times and today also when the matter was heard after the record was summoned, the learned counsel for assessee was unable to place on record the so-called affidavit. 8. Be that as it may, in my view the Dy. Com. (Appeals) ought not to have accepted such an affidavit without providin .....

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rence of stock to the extent of 2530 kg and the order may be passed on the spot. It is only then that the AO passed an order on 28.10.2002. 10. Nothing has been placed on record by the learned counsel for the assessee as to whether there was pressure or coercion inflicted on the assessee and now it was for the assessee to prove by evidence that coercion or pressure was built upon the assessee by the survey team. 11. The principles about the statements having been recorded at the time of survey/s .....

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nnot be said to be proper. It has already been expressed earlier that despite chance having been provided to the counsel for respondent he is unable to produce the copy of the said affidavit for perusal of the court and the records which have been produced of the AO which was produced by the counsel for Revenue and which is also seen by the counsel for the respondent, at-least no affidavit or any material is apparent. 12. Division Bench of this Court in the case of CIT, Bikaner v. Ravi Mathur an .....

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ed as in the instant case by the Tribunal in a summary or in a cryptic manner. Statements recorded under Section 132(4) cannot be discarded by simply observing that the assessee retracted the statements. One has to come to a definite finding as to the manner in which retraction takes place. On perusal of the facts noticed hereinbefore, we have noticed that while the statements were recorded at the time of search on 9.11.1995 and onwards but retraction, is almost after an year and that too when t .....

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and factually incorrect. In our view, retraction after a sufficient long gap or point of time, as in the instant case, looses its significance and is an afterthought. Once statements have been recorded on oath, duly signed, it has a great evidentiary value and it is normally presumed that whatever stated at the time of recording of statements under Section 132(4), are true and correct and brings out the correct picture, as by that time the assessee is uninfluenced by external agencies. Thus, whe .....

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has to be discharged by an assessee at the earliest point of time and in the instant case we notice that the AO in the Assessment Order observes :- "Regarding the amount of ₹ 44.285 lakhs, it is now contended that the statement u/s 132(4) was not correct and these amounts are in thousands, not lakhs i.e. it is now attempted to retract from the statements made at the time of S & S operations". Therefore, what we gather from the Assessment Order and on perusal of the above find .....

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tion in the case of Bachittar Singh v. CIT & Anr. (supra) of the Punjab & Haryana High Court, arose that a survey took place under Section 133A on 21.3.2003 and the assessee during the course of survey surrendered for taxation a sum of ₹ 19 lakh stating therein that he had purchased shop no.5-A, New Cloth Market, Ambala City, for ₹ 24 lakh jointly with his brother and source of investment was not reflected in the books of account. Later the assessee sought to resile from the .....

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also claimed that the said statement was not at par with the statement made under Section 132(4) of the Act on oath. However, the Tribunal held that retraction from the statement had to be at the earliest opportunity in the absence of which voluntary statement recorded in the presence of family members was an important material, which could be acted upon. The Punjab & Haryana High Court upheld the finding of the Tribunal, even when there was just a gap of less than 3 months. It would also be .....

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ld that the statement earlier made was false. The assessee failed to produce books of account which may have been maintained during regular course of business or any other authentic contemporaneous evidence of agricultural income. In the circumstances, the statement of the assessee could certainly be acted upon. 15.5 In the case of CIT v. Hotel Meriya (supra), the facts before the Kerala High Court were that a search was conducted under Section 132(4) on 28.6.2001, which resulted that there was .....

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in extento so also explanation, observed ad infra :- ..Going by the above provision along with its Explanation we find that the statement of the partner and employees recorded and documents collected are relevant and admissible in respect of all matters for the purpose of any investigation connected with any proceedings under the Income-tax Act. Hence, we are of the opinion that the statements so recorded and documents collected by the Assessing Officer cannot be brushed aside as done by the App .....

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block assessment would be defeated. We cannot shut our eyes to the legislative intent. Here, what was disclosed that for sale, no bills are issued, but paper slips are issued with the price. Though carbon copy is retained it did not contain the sale price. Sale slips are destroyed then and there. Cash books are maintained by recording the 80 per cent of the price of liquor at a later date. When such practices are adopted, nobody can expect evidence for every year in a block period. What is poss .....

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he assessee regarding the actual amount paid as disclosed voluntarily in his sworn statement and the amounts disclosed in the cash flow statement corroborated by the recovery and seizure of title deeds. Personal expenses were estimated on the basis of the admission made again in the statement under Section 132(4) of the Act. Though the AO made addition, the Tribunal deleted the addition on the basis that apart from the statements, there was no other material and there was a retraction made by th .....

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annot be retracted at the mere will of the party. A statement made under oath deemed and permitted to be used in evidence, by express statutory provision, has to be taken as true unless there is contra evidence to dispel such assumption. A self-serving retraction, without anything more cannot dispel the statutory presumption. The admission made by the assessee before the Assessing Officer corroborated by the title deeds seized in search absolved the Department from discharging any burden regardi .....

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issions were made under threat and coercion is clearly unfounded. The Tribunal also has categorically refused to consider the issue of threat and coercion. In such circumstances, the Tribunal ought to have seen if the assessee has established that the admissions made were erroneous and factually incorrect. It was well within the capacity of the assessee to have shown before the fact finding authorities either at the original or at the appellate stage that the assessee had only paid amounts as di .....

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atute has to be considered to have evidentiary value. In the circumstances, we proceed to answer the first question of law in favour of the Revenue and against the assessee. 13. The sustainability of the additions madeby the Assessing Officer with respect to undisclosed income vis-à-vis the property transactions as also that made on account of personal expenditure has to be decided with reference to the answer in the first question, since both additions are on account of admissions made i .....

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he instant case, on the clearadmission of the assessee corroborated by the documents the burden on the Department ceases to exist. On the retraction being filed by the assessee, there is a burden cast on the assessee to prove the detraction or rather disprove the admissions made. It is not a shifting of the onus but a new burden cast on the assessee to disprove the earlier admissions having evidentiary value. As noticed earlier, retraction made by the assessee can only be considered as a selfser .....

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gh Court of Madras in the case of K. Sakthivel v. Assistant Commissioner of Income Tax (2012) 252 CTR (Mad) 531, had also an occasion to consider an identical situation of statements having been recorded under Section 132(4) of the Act, where retraction was made during the course of the assessment proceedings and much later than the statements had been recorded, the Court held thus :- 18. As regards the contention of the assessee that the statement recorded was in violation of provisions of CPC .....

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1999 and the assessee thereafter too participated in the enquiry until 2003 and he had no doubt about the truthfulness of the statement made. However, for some reason best known to him, the assessee in the letter on 26.6.2003, took a plea that the statement were not recorded in the presence of Dy. Director of IT (Inv.) and statements were not given voluntarily. It may be seen that the assessee is stated to have written letters on 12th June, 2003 and 26th June, 2003 and it is relevant to point o .....

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d confessed that he purchased the gold and had brought it. He admitted that he purchased the gold and converted it as a Kara. In this situation, bringing the gold without permission of the authority is in contravention of the Customs Duty Act and also FERA. When the petitioner seeks for cross-examination of the witnesses who have said that the recovery was made from the petitioner, necessarily an opportunity requires to be given for the crossexamination of the witnesses as regards the place at w .....

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sion. Therefore, he is entitled to cross-examine the panch witnesses before the authority takes a decision on proof of the offence. We find no force in this contention. The Customs officials are not police officers. The confession, though retracted, is an admission and binds the petitioner. So there is no need to call panch witnesses for examination and crossexamination by the petitioner. 13. Therefore taking into consideration the above observation of this court, though in Income Tax proceeding .....

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see failed to discharge the onus immediately as soon as the survey took place and the onus as noticed earlier was to bring to the notice of the higher officials of the Revenue, if something wrong happened in the survey proceedings and such having not been brought, the onus has not been discharged. 15. It is settled law that once the officer conducting survey on the basis of the very own statements of the respondent assessee having accepted the guilt/charge, having accepted about the excess stock .....

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