TMI Blog2016 (5) TMI 1304X X X X Extracts X X X X X X X X Extracts X X X X ..... be proved. For the reasons aforesaid :- i) the additions relating to : (a) Ashiyana Apartments of ₹ 31,00,000/- and issue relating to Capital Gain of ₹ 13,50,384/- in 3 hands; (b) Property at Raja Park of ₹ 1,59,333/-; and (c) Purchase & sale of plots of ₹ 2,29,533/- in each hand, of the instant appeals are restored to the Tribunal to redecide the issues after giving adequate opportunity of hearing to both the sides and the Tribunal is directed to pass speaking order and redecide the three issues in accordance with law within a period of four months from the date certified copy of this order is placed before it. Let the parties may provide copy of this judgment to the Tribunal and let the Registry send a copy of this order separately to the Tribunal and the Tribunal would thereafter proceed ahead to redecide the issues. ii) the finding of the Tribunal insofar as deleting the addition of ₹ 93,575/- relating to Gold Ornaments and Jewellery, is found in accordance with law and we uphold the finding of the Tribunal in this regard and reject the claim of the Revenue; iii) we reverse the finding of the Tribunal with reference to Medica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not correct and the amounts which were taken into lakhs are in thousands and attempted to retract from the statements made at the time of search and seizure operation. We deem it appropriate to take facts of DBITA No.67/2002 in the case of Ravi Mathur, who is said to be the key person and in whose case detailed order has been passed. 3. Learned counsel for the appellant-Revenue, though contended that questions of law have been admitted by this Court, which are general in nature and all the additions deleted by the Tribunal are challenged but he restricted his submissions to the questions relating to the following additions only and, therefore, we would discuss and give our findings only on the question/arguments raised by the learned counsel for the Revenue :- a. Ashiyana Apartments Capital Gain : Addition of ₹ 31,00,000/- ₹ 13,50,384/- in three hands b. Jewellery : Addition of ₹ 93,575/- c. Medical expenses : Addition of ₹ 99,880/- in four hands d. Seized documents : Addition of ₹ 44,28,500/- e. Property at Raja Park : Addition of ₹ 1,59,333/- in various hands f. Purchase sale of plots:Addition of ₹ 2,29,533/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the valuation has been made as on the date of search, then no contrary finding could have been recorded by the Tribunal. He contended that addition has also been deleted accepting the retraction without any basis. 4.2 Learned counsel for the appellant further elaborated and contended that the building was complete by almost 75% and even the District Valuation Officer valued the property though on 7.3.1996, but for the period as on 9th November 1995 i.e. on the day of search, however, the Tribunal without any basis took into consideration that since the date of inspection was 7.3.1996, therefore, the District Valuation Officer took into consideration the valuation as on 7.3.1996 which is contrary to the material on record. Even otherwise he contended that from November 1995 till 7.3.1996, for a period of about four months, the investment shown by the assessee was not proved. He further contended that the Tribunal has simply observed that the surrender so made was immediately retracted after search , whereas it was pointed out that there was no retraction immediately and retraction, if any, was at the time of conclusion of the assessment proceedings, and thus an afterthought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not as on 9.11.1995, and in between the assessee had incurred substantial amount and there was no difference in between the two, and leave apart the statement was recorded under pressure and coercion, therefore, addition was rightly deleted by the Tribunal. He contended that retraction was proper and Tribunal rightly found favour. He thus, contended that the order of the Tribunal is well reasoned and the question raised by the Revenue deserve to be answered accordingly. Learned counsel for the assessee further contended that all along the property has been shown as that of HUF and later-on partitioned and complete evidence was placed on record and the Tribunal had gone into the issue elaborately and had come to a correct conclusion based on the material on record, and extraneous material is not required to be considered. b . Jewellery found : Addition of ₹ 93,575/- 5. Addition of ₹ 93,575/- was made on account of excess Gold Ornaments and Jewellery found during the course of search. Few slips were also found about purchase of some Jewellery. It was claimed that Smt. Prem Kumari Mathur (mother of Ravi Mathur) was an existing Wealth Tax assessee and had decla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'P' of panchnama dated 9.11.1995 where eight passports evidencing visit to UK were found and it transpires that they were related to travel to UK on account of emergency medical treatment of Smt. Prem Kumari Mathur, who is one of the appellants. It also revealed as per Annexure AB-19 that foreign exchange of US Dollar 2000/- and Pound Sterling 12500/- was issued in the name of Smt. Prem Kumari Mathur by the Deputy Controller of Exchange, Control Department vide letter dated 7.6.1989 for her medical treatment. The AO on the basis of these very documents and after seeking further information, found that the bare minimum expenses on air tickets and the foreign exchange taken by Smt. Prem Kumari Mathur, when converted into Indian Rupees, totalled ₹ 3,34,480/- after reducing Pounds 770 which were returned after arrival by Smt. Prem Kumari Mathur. The AO also came to an apparent conclusion that six family members remained in London for a period of about 16 days i.e. June 13 to 30, 1989 (as mentioned at page 14 of the assessment order) and expenditure must have been incurred on boarding, lodging, local travelling, medicines etc., keeping in view a conservative estimate of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition. d . Seized documents : Addition of ₹ 44,28,500/- 7. The learned counsel for the Revenue contended that addition was made on the basis of the statement of the assessee (Ravi Mathur) himself, in whose possession Annexures A-1, A-2 and A-4 were found and Ravi Mathur himself during the course of search in his statement recorded under Section 132(4) of the Act clearly stated on oath that the amount noted is in coded form, were in lakhs, and once an assessee himself states the real fact then nothing more was required to be proved. There was no claim of any undue pressure/coercion at all even after search concluded and much later at the fag end of the hearing of the assessment proceedings a simple claim was put forth which ought not to have been accepted by the Tribunal, and once documents were found in custody, control and possession such retraction is not at all acceptable. He contended that the finding of the Tribunal is unjust, bad and perverse and by no stretch of imagination it could have given the benefit to the assessees. The Tribunal has ignored elaborate discussion made by the learned Assessing Officer, which is on the basis of seized documents. 7.1 Per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aja Park was also equally, if not better in a posh colony/locality, was not encumbered with any statutory tenancy or otherwise and accordingly the AO was of the view that value was understated considerably. 8.1 The learned counsel for the Revenue further contended that the AO has been fair enough in coming to the aforesaid conclusion as adjacent/similarly situated land of the assessee, assessee's own valuer valued the property @ ₹ 4600/- per sq.yd. and even the AO was fair enough to adopt the value @ ₹ 4000/- per sq.yd. giving a further reduction of almost 15% to what was valued by the assessee's own valuer. He further contended that even the DLC value on which the stamp duty was charged by the Sub-Registrar was ₹ 17,56,500/-. Therefore, he contended that the apparent purchase consideration at ₹ 10,80,000/-, was understated and either the value as assessed by the Sub-Registrar for the purposes of charging of stamp duty which is by and large fair market value or in the alternative the value adopted by the AO giving further reduction be directed to be taken into consideration. He further contended that undisclosed amount was mentioned in the seized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed expenditure was found and not otherwise, and thus contended that finding of the Tribunal that in a block assessment, addition if at all, could be made, if something is found on record unexplained, and nothing more and Tribunal being satisfied rightly deleted the same. He further contended that the Tribunal was satisfied about recording of the transactions and addition could not have been made on assumptions. 10. In support of his submissions, learned counsel for the appellants relied upon judgment of this Court in the case of CIT v. Elegant Homes Pvt. Ltd. [(2003) 259 ITR 232], one of the group entity who was simultaneously searched and whose appeal came up before this Court, and further relied on Bachittar Singh v. CIT Anr. [(2010) 328 ITR 400 (P H)], CIT v. Hotel Meriya (Ker) [(2011) 332 ITR 537], and CIT v. O. Abdul Razak (Ker) [(2013) 350 ITR 71]. 11. In support of his contentions, learned counsel for the assessee relied upon judgment of Calcutta High Court in CIT v. Ashim Krishna Mondal [(2004) 270 ITR 160]. 12. We have heard the rival contentions of the learned counsel for the parties and perused the material and judgments relied upon by the parties. 13. It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supported by convincing evidence through which an assessee could demonstrate that the statements initially recorded were under pressure/coercion 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, whenever an assessee pleads that the statements have been obtained forcefully/by coercion/undue influence without material/contrary to the material, then it should be supported by strong evidence which we have observed hereinbefore. Once a statement is recorded under Section 132(4), such a statement can be used as a strong evidence against the assessee in assessing the income, the burden lies on the assessee to establish that the admission made in the statements are incorrect/wrong and that burden has to be discharged by an assessee at the earliest poi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence 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 appropriate to quote relevant paras :- 6. It is not disputed that the statement was made by the assessee at the time of survey, which was retracted on May 28, 2003, and he did not take any further action for a period of more than two months. In such circumstances, the view taken by the Tribunal that retraction from the earlier statement was not permissible, is definitely a possible view. The mere fact that some entries were made in a diary could not be held to be sufficient and conclusive to hold 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 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of CIT v. O. Abdul Razak (supra), on the basis of seized documents recovered during search, addition was made with respect to purchase of lands on the strength of the admission made by the 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 the assessee. However, the High Court taking into consideration that the statements recorded under Section 132(4) of the Act have a strong evidentiary value, observed ad infra :- 12. The Tribunal's finding that the statement recorded under section 132(4) has no evidentiary value, hence cannot be sustained. The reliance placed by the Tribunal on the retraction statement is totally untenable in so far as any statement recorded under section 132(4), statutorily deemed to have evidentiary value; cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the answer in the first question, since both additions are on account of admissions made in section 132(4) statement corroborated by documents recovered in search and the attendant circumstances. The Tribunal placed much reliance on the retraction and even went to the extent of stating that it was the Department's burden to prove the retraction to be untrue by bringing in any corroborative, evidence. The Hon'ble Supreme Court has considered the question of burden of proof in the decision reported in CIT v. Best and Co. P. Ltd. [1966] 60 ITR 11 (SC); AIR 1966 SC 1325. 14. In the instant case, on the clear admission 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 self-serving after thought and no reliance can be placed on the same to disbelieve the clear admissions made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad 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 cross-examination of the witnesses as regards the place at which recovery was made. Since the dispute concerns the confiscation of the jewellery, whether at conveyor belt or at the green channel, perhaps the witnesses were required to be called. But in view of confession made by him, it binds him and, therefore, in the facts and circumstances of this case the failure to give him the opportunity to cross-examine the witnesses is not violative of principle of natural justice. It is contended that the petitioner had retracted within six days from the confession. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed income. The view is contrary to the provisions of Chapter XIV-B of the Income Tax Act, 1961. In Chapter XIV-B of the Act, special provisions for assessment in search cases have been given and if any amount of income has not been taxed and during the course of search, if some undisclosed income is found on the basis of material seized, that should be treated as undisclosed income as per the scheme of special assessment under the aforesaid Chapter. 15.10 This Court has gone to the extent that even if the entries are recorded in the regular books of account, the assessee has to prove the genuineness of the deposits and further burden has to be discharged by the assessee. The said judgment of this Court has admittedly become final and is even otherwise binding in the instant appeals and is binding on this Court. 16. In the light of the above, we would now give our findings :- Ashiyana Apartments Capital Gain 16.1 During the course of hearing, neither the Valuation Report, nor any other material was brought on record by either side of the parties. Therefore, though almost 14 years have passed, but taking into consideration the fact that adequate material is not the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his regard. It was argued that the Tribunal has gone wrong in proceeding to consider Section 45(2) of the Act when the property was taken in stock in trade by the owner himself and argued that in the instant case the provisions of Section 45(3) of the Act shall apply where the capital assets have been transferred by a person to a firm or body of individuals or association of persons by way of capital contribution and in the instant case the valuation of the property is to be taken on the date of such transfer. We do find mention of agreement of sale in the instant case on 24.7.1994 for the apparent consideration of ₹ 45 lakh and possession is also directed to be transferred in the assessment order. In our view, capital gain liability does arise once there is an agreement depicting certain amount and possession having been transferred and it is immaterial if the amount is not received. However, since the facts are not emerging as they should appear in the order of the Tribunal, while we hold that capital gain liability does arise, in view of what we have narrated hereinbefore of possession having been delivered and agreement having been executed, but we restore and set asid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal observes in para 17 In our considered view assessee and his family enjoying a very high status and they are the persons of very good repute. Therefore, they will not ask for any help or assistance from friends, relatives and Jaycees members. In our view, this finding strengthens the claim of the Revenue that the assessees would not carry raw food like flour, oil, ghee etc., to London and cook themselves. Though this Court need not go into guesswork or estimation, but the manner in which huge foreign exchange was purchased and there is no proper explanation offered before the AO which could have been accepted. However, the Tribunal in a summary manner, without any basis, reduced the expenditure by ₹ 1,50,000/-. Neither the assessee placed any material on record nor the Tribunal has given any basis for reducing the expenditure by ₹ 1,50,000/-. In our view, when material has been found that six members had gone to London accompanying Smt. Prem Kumari Mathur for her medical treatment. The claim of the assessee that on or before the date of departure, certain petty gifts were received from friends and relatives, has been discarded as none would give petty gif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /and the manner of retraction, we fail to understand as to how the Tribunal came to the aforesaid conclusion in deleting the addition. In our view, the deletion of addition merely because the statements on oath under Section 132(4) were retracted at the time of assessment, is perverse. 16.7 It would also be appropriate to quote para 22 of the impugned order :- 22. We have gone through the captioned papers in original, considered the rival submissions and the statements. We are in agreement with the ld. counsel that the presumption should be applied only where specific evidence is not available as the presumption cannot over rule the specific evidence. On the basis of figurewise comparison of Annexure A-4 with Annexure A-2 which is admittedly in full rupees, it is established beyond doubt that amounts mentiond in Annexure A-4 are in thousand of rupees and not lacs of rupees. We, are, therefore, of the opinion that the amount of consideration is only of ₹ 4,98,050/- and not ₹ 44,28,500/-. Keeping in view this fact, we hold that the addition of ₹ 44,28,500/- is unjustified and, therefore, the same is deleted. So far as the amount of ₹ 4,99,050/- is conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to the various documents such as the Valuers Report which had been drawn at the time the project was still at a concept stage, i.e. it must have formed part of the project report.. Thus, the AO has found that Ravi Mathur who himself is a technical person, a Civil Engineer and one of the big builders, after analysing the various documents, agreed to surrender by observing that the money written was in lakhs. 16.11 However, the Tribunal while deciding the issue has proceeded to hold that the entries were not in lakhs but in thousands merely on the so-called retraction made at the final stage of assessment and we are unable to uphold the finding of the Tribunal. The Tribunal has not assigned any reason for taking a different view from the statements recorded under Section 132(4) of the Act. The burden which lay on the assessee after giving statements on oath, has not been discharged as the onus and burden was on the assessee to discharge, which in our view he has utterly failed. 16.12 For the reasons assigned earlier, the retraction has been held to be improper and could not have been taken into consideration by the Tribunal. The finding of the Tribunal that the coded fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve gone through the facts of the case and rival submissions. We are in agreement with the argument that the generalisation cannot be permitted on the basis of one small instance particularly when it is a case of block assessment. The study of the instances quoted revealed that in one case there is an evidence of investing ₹ 50,000/- over and above the recorded consideration. Though all the transactions including this have been disclosed in regular returns but so far as ₹ 50,000/- is concerned, the addition is liable to be made in the hands of Shrimati Prem Kumari Mathur. In all other transactions of purchase and sale there is no evidence of passing of money over and above the consideration recorded in regular course. The consistent view of the Bench has been that generalisation cannot be permitted in absence of evidence, whatsoever strong probability there may be, an addition is not justified in a search case when no evidence whatsoever is being found to support the addition. We have also gone through the case laws cited by the parties. We find that the assessee deserves relief. Although ₹ 50,000/- is sustainable in the hands of Smt. Prem Kumari Mathur, rest of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e seized papers to come to a logical conclusion and the AO can even examine the entries recorded in the books of account and such entries or other material have to be taken note of by the AO and the assessee has to offer a satisfactory explanation even of the recorded transactions and the genuineness of the same is also required to be proved. 18. For the reasons aforesaid :- i) the additions relating to : (a) Ashiyana Apartments of ₹ 31,00,000/- and issue relating to Capital Gain of ₹ 13,50,384/- in 3 hands; (b) Property at Raja Park of ₹ 1,59,333/-; and (c) Purchase sale of plots of ₹ 2,29,533/- in each hand, of the instant appeals are restored to the Tribunal to redecide the issues after giving adequate opportunity of hearing to both the sides and the Tribunal is directed to pass speaking order and redecide the three issues in accordance with law within a period of four months from the date certified copy of this order is placed before it. Let the parties may provide copy of this judgment to the Tribunal and let the Registry send a copy of this order separately to the Tribunal and the Tribunal would thereafter proceed ahead to redecide the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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