TMI Blog2019 (9) TMI 1172X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee on 30.01.2014. There may have been some force in the contention of the revenue authorities if the statement u/s 132(4) of the Act was taken during the course of search at the assessee s premises or during the continuation of search, the statement may have been recorded on other places but the fact is that so far as the assessee M/s. Ultimate Builders is concerned the search concluded on 31.01.2014 and before the conclusion of the search no surrender of undisclosed income was made in the statement recorded u/s 132(4) of the Act by the persons available at the assessee s business premises. Surrender for various group concerns and not specifically for the assessee M/s. Ultimate Builders. Reference was also given to other business concerns namely M/s. Virasha Infrastructure, Signature Infrastructure, Signature Builders and Signature Builders and Colonisers. Certainly the search in the case of concerns other than the Ultimate Builders did not conclude on 02.02.2014 but at that point of time on 02.02.2014 the search in the case of Ultimate Builders stood concluded two days before on 31.1.2014. Alleged statement given by Mr. Vipin Chouhan on 02.02.2014 may be construed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alled declaration made during the course of search. 3. Brief facts of the case as culled out from the records are that the assessee is a partnership firm carrying on the business of Real Estate as Builder and Developer. A search u/s 132 of the Act was initiated on Signature Group as well as the business associates on 29.1.2014. Assessee firm being part of Signature Group was also covered under the search action. In the case of the assessee search action commenced on 29.1.2014 and was concluded on 31.1.2014. However search u/s 132 of the Act in the case of Signature Group and other concerns concluded on a later date. Subsequent to search, notice u/s 153A of the Act was served upon the assessee. Return of income declaring ₹ 1,10,38,030/- was filed on 29.9.2014. In order to scrutinize the records notices u/s 143(2) and 142(1) of the Act was served upon the assessee. After considering the statement and search material of Signature Group, Ld. Assessing Officer (In short Ld.A.O ) came to know that one of the partner of the assessee firm Mr. Vipin Chauhan gave a statement on 2.2.2014 u/s 132(4) of the Act. In this statement he su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant has challenged the addition of ₹ 2,25,00,000/- on account of admission of undisclosed income. During the course of search, various incriminating documents were found and seized from various premises of Signature Group. These documents were confronted to the partners of various concerns of the group, however, no satisfactory explanation was offered. In absence of any satisfactory explanation, the main persons of the group admitted additional income of the group in the hands of various concerns during statement recorded on oath. The additional income was declared after consulting the other partners and related persons of various concerns of the group. The brief detail of additional income admitted by the assessee is as under:- (Rupees in Lakhs) Sr.No Concern/F. Y. 2011-12 2012-13 2013-14 Total l. Signature Infrastructure 50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TOTAL 150 Assessee during assessment proceedings before AO retracted from the disclosure made during the search by stating that he has not earned any unaccounted income and has not incurred any unrecorded/unexplained expenses. 4.3 Submission filed by appellant along with the details / material brought on record have been duly considered inter alia case laws relied upon by the appellant. During the course of search, Shri Vipin Chauhan, one of the directors of the appellant company admitted unaccounted receipts on sale of units to the tune of ₹ 2,25,00,0001- of the appellant firm. The appellant firm filed return of income uls 139(1) on 29.09.2014 declaring income of ₹ 1,10,38,0301-. As the appellant firm had not offered the income disclosed uls 132(4) in the return filed uls 153A the Assessing' officer has treated ₹ 2,25,00,0001- in A.Y 2014-15 as undisclosed income of the appellant and has made addition to the total income of the appellant in respective assessment year, The Assessing Officer has made entire addition of ₹ 2,25,00,0001- on the basis of statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce with that statement. The reasonableness of the AO's approach may be appreciated that he had not made any enhancement or substitution in the amounts as offered/disclosed in the said statement. It was a statement pertaining to certain facts which were in the exclusive knowledge of the assessee. Those facts were disclosed to the Revenue Deptt. Thereupon those were accepted by the Revenue Department. Those facts were of such nature that there was no scope of existence of any other evidence. Affirmation of facts at best can only be done by the assessee in his own volition. If the assessee wanted to correct the said statement, then it was open for him to show the evidences to retract those facts. But no such evidence was furnished though an another chance was granted while explaining the entire issues at search proceeding stage which means that the assessee had no evidence at all in his possession. It is here to clarify that the statute prescribes the power of the Revenue Authorities for recording a statement on the day of search operation. In this context, case law cited few decisions wherein there was a discussion of retraction of a statement or the legal sanctity of statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As regards to the evidentiary value of the disclosure statement, Sections 17 to 31 of the Indian Evidence Act, 1872 deal with admission. As defined in section 17, it is a statement, (oral or documentary or contained in electronic form) which suggests any inference as to any fact in issue or relevant fact, and which is made by any of the person, and under the circumstances, hereinafter mentioned . The general rule with regard to admission is that the party or their representative says about the matter in dispute or facts relevant thereto which throw light on the issue in dispute or consideration. It is well settled that a party's admission as defined in sections 17 to 20, fulfilling the requirements of s.21, is substantive evidence proprio vigare. An admission, if clearly and unequivocally made, is the best evidence and though not conclusive, shifts the onus on to the maker. Reliance is placed on Thiru Ion v. Returning Ojfier, A 1977 (SC) 1724. Although, in this case there has been no allegation of coercion, the Courts have gone further and held that the confession need not be ruled out merely because of an allegation of use of coercion. Many statutes make use of such c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rily but it was obtained under coercion, threat or undue influence. But the burden is upon the person making the statement to prove that the statement given by him was not voluntary. The assessee can discharge this burden by giving a direct evidence of coercion or threat by the Authorized Officer or by circumstantial evidence in this regard. The time gap between the statement and the retraction of statement would also one of the important points to be taken into account while deciding whether the statement was voluntary or not. (ii) The other circumstance is where the statement was given under the mistaken belief of either fact or law. Here again the burden is upon the person giving the statement to prove that the statement given by him was factually incorrect or was untenable in law. e)This view is supported by the decision of the Tribunal Bench of Ahmedabad in the case of Manharlal Kasturchand Chokshi v. ACIT [1997] 61 ITD 55 (Ahd.), and also in the case of Hotel Kiran v. ACIT [1971] 82 ITR 453 (Pune). f) Apart from the above legal lacunae, the appellant's retraction also suffers from other procedural defects. The appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me efficacy in law as a retraction made at the earliest point of time from the day of admission. A belated retraction would fall in the category of afterthought instead of being retraction. That apart, for a retraction to be effective so as to dislodge the admission made earlier in point of time, the retraction has to be supported by contemporaneous evidence and the onus is on the person making such admission and retraction. Thus the legal position about the assessee's belated retraction is clear that it is an after - thought. j) Thus, from the above analysis it emerges that: i. The retraction was made after a period of eight months. ii. It was never communicated to the Departmental authorities, merely not disclosed with the return of income; iii. From record it is impossible to hold that any threat or coercion has been exerted during the confession statement of the assessee. iv, Irrespective of the form or validity of the voluntary disclosure statement or of the deposition taken from the assessee on 02.02.2014, the evidence of testimony cannot be wiped out and doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to him were incriminating. This list of document has been reproduced in more than 10 cases (Pg.87-117). The details of these documents have also been mentioned in the list which were found at different premises and were not pertaining to the assessee. The Ld. A.O. raised a specific query about the cash receipts which were answered with all necessary details on 18.02.2016 (Pg.78-86 of PB). While passing the order the Ld. A.O. did not refer to any of the incriminating material but made the addition only on the basis of the statement made after the search with the remark that the retraction made from the confession is not acceptable as the statement recorded u/s 132(4) is an evidence and the confession has been made without any coercion and force. He therefore, made the addition of ₹ 2,25,00,000/- as undisclosed income on the basis of admission made by the assessee. 2. In appeal it was submitted before the Ld. CIT(A) that without finding any incriminating material no addition can be made in the assessment. It was submitted before the Ld. CIT(A) as under: The issues with regards to the addition which are requested to be adjud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of account, documents, money, bullion jewellery or other valuable article or thing and any statement made by such person during such examination, may thereafter be used in evidence in any proceeding under the Income Tax act. It may be appreciated that as per provisions of section 132(4), a statement u/s 132(4) is valid and can be used as evidence only if all the conditions mentioned herein below are cumulatively satisfied. a. the statement is recorded by the authorized officer AND b. the statement is recorded during the course of search or seizure AND c. the statement is made by the person who is found to be in the possession or control of the books of account, documents. (It may be mentioned that the assessee has not been found to be in possession of any cash or other valuable and accordingly the requirement of the section to this effect has no relevance in the case of the assessee) Thus in the case of the assessee it needs to be adjudicated that: i. whether the statement is recorded by the authorized officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether the statement is recorded during the course of search The statement under reference is recorded on 02.02.2014 and that too in the premises which are different from the premises which were searched in the case of the assessee. The witnesses in the case of the statement were also different from the persons who have attended the search in the case of the assessee. Thus the statement recorded is after the completion of the search and seizure at the premises of the assessee. The said statement was recorded on 02.02.2014 during search and seizure operation at 18- 19 Kolar Castle, Chuna Bhatti Square, Kolar Road, Bhopal in the case of Signature group, as such it can be concluded that the said statement was not in connection with the search operation carried on in the case of the assessee at E-2/21, Arera Colony Bhopal from where the entire seizure in the case of the assessee was made. Thus the statement under consideration cannot be said to have been recorded during the course of search in the case of the assessee. iii. Whether the statement is of the person who is found to be in possession of the books of account and other r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Andhra Pradesh High Court in the case of CIT V Shri. Ramdas Motor Transport (2000) 163 CTR 0403 wherein it was observed and held in Para 7 by the court that A plain reading of sub-s. (4) shows that the authorised officer during the course of raid is empowered to examine any person if he is found to be in possession or control of any undisclosed books of account, documents, money or other valuable articles or things, elicit information from such person with regard to such account books or money which are in his possession and can record a statement to that effect. Under this provision, such statements can be used in evidence in any subsequent proceeding initiated against such person under the Act. Thus, question of examining any person by the authorised officer arises only when he found such person to be in possession of any undisclosed money or books of account. But, in this case, it is admitted by the Revenue that on the dates of search, the Department was not able to find any unaccounted money, unaccounted bullion nor any other valuable articles or things, nor any unaccounted documents nor any such incriminating material either from the premises of the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration was made by the partner and on which addition has been sustained by him. The AO has provided an illustrative list of 14 cases in page 10-11 of the order contending that those papers are incriminating documents seized based on which the additional income was disclosed by the assessee. In this regards it may be mentioned that none of the papers referred to by the AO were seized from the assessee and none of them related to the assessee and none of them had any mention from which any inference could be drawn that the assessee might have earned some undisclosed income. The details of the illustrative cases mentioned by the AO are given hereunder for ready reference: Sr. No (i) Paper reference (ii) Seized from (iii) Relates to (iv) A LPS 3 Office premises of signature group at 18-19 kolar castle Chuna Bhatti Square Signature Colonisers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P. Raju, Shiv Narayan Rajput, Aradhya Bhoomika Construction N Post search enquiry NA Signature Infrastructure, Motilal, Thakur Prasad All the above details are readily verifiable from the assessment order itself. From a brief perusal of Column (iii) it would be observed that the papers under reference are seized from the premises of Signature Group at Chuna Bhatti, from project offices of some firms at Raipur, from the residence of P.Raju etc. The office of the assessee is situated at E-2/21, Arera Colony, Kamdhenu Tower, Bhopal and all the books and records of the assessee were seized from the said premises as would be obvious from the panchnama prepared. No business activity of the assessee has ever been carried on from the premises of Signature Group at Chuna Bhatti, Bhopal. The only relation the assessee firm has with the Signature Group is that one of the partner Mr. Vipin Chouhan(holding 33% share in the assessee firm) is partner/director of some of fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition is not permissible solely on the basis of a retracted statement without finding any collaborative evidence. Reliance in this regard is placed on the judgment of the (i) Very recently the Hon ble Indore Tribunal in the case of ACIT(1) vs. Sudeep Maheshwari in ITA No.524/IND/2013 vide order dated 13.02.2019 held in para 6 that during the course of the search and seizure no incriminating material or undisclosed income or investments were found. Under the mental pressure the assessee declared 3 crores but retracted from the admission. It is a settled position of law that the addition cannot be sustained merely on the basis of the statement. There has to be some material corroborating contents of the statements. The A.O. failed to correlate the disclosure made in the statement with the incriminating material gathered during the search. Therefore, no addition can be made on this account. In view of the above it is submitted that the additions made are bad in law since they have been made without finding any incriminating material solely on the basis of the statement recorded after the conclusion of the search. It is thus su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied by both the parties. The sole grievance of the assessee raised in Ground No.1 of the instant appeal is against the order of Ld. CIT(A) confirming the addition of ₹ 2,25,00,000/- made by the Ld. A.O on account of undisclosed income surrendered during the course of search by the partner of the assessee firm. 10. At the cost of repetition we would like to recite and recapitulate the facts once more. The assessee is a partnership firm engaged in real estate business. It is the part of Signature Group. Search action was initiated in the Signature Group and its associates on 29.1.2014. The assessee s association with the Signature group is on account of the common partners in various concerns. Assessee is separately assessed to tax. Search u/s 132(4) of the Act was initiated in the case of the assessee on 29.1.2014 and was concluded on 31.1.2014. This fact is proved on the basis of panchanama prepared by the officer of the search team which is placed at page 62-64. No surrender was made in the statements taken by the search team during the course of search from 29.1.2014 to 31.1.2014. There is no mention of any incriminating material refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case already concluded on 31.1.2014. He further submitted that no incriminating material was found during the course of search and as held by Hon ble Tribunal in the latest decision in the case of ACIT(1) vs. Sudeep Maheshwari (supra) that no addition was called for which has been made merely on the basis of the statement without correlating the disclosure made in the statement with the incriminating material gathered during the course of search . 13. So the contention of the Ld. Counsel for the assessee can be summarised that the addition cannot be made merely on the basis of statement which too was taken after conclusion of the search and no correlation has been made with the incriminating material found during the course of search. 14. On the other hand Departmental Representative gave reference to various judgements referred above. She mainly placed emphasis on the judgment of Hon ble High Court of Madras in the case of Kishore Kumar V/s DCIT (supra) holding that when there was a clear admission of undisclosed income in the statement sworn in u/s 132(4) of the Act there is no necessity to scrutinise the documents . 15. Now so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on other places but the fact is that so far as the assessee M/s. Ultimate Builders is concerned the search concluded on 31.01.2014 and before the conclusion of the search no surrender of undisclosed income was made in the statement recorded u/s 132(4) of the Act by the persons available at the assessee s business premises. 19. As regards the statement of Mr. Vipin Chouhan given on 02.02.2014 is concerned, we find that this statement contains the surrender for various group concerns and not specifically for the assessee M/s. Ultimate Builders. Reference was also given to other business concerns namely M/s. Virasha Infrastructure, Signature Infrastructure, Signature Builders and Signature Builders and Colonisers. Certainly the search in the case of concerns other than the Ultimate Builders did not conclude on 02.02.2014 but at that point of time on 02.02.2014 the search in the case of Ultimate Builders stood concluded two days before on 31.1.2014. 20. We therefore are of the considered view that the alleged statement given by Mr. Vipin Chouhan on 02.02.2014 may be construed as the Section 132(4) of the Act for all the other concerns named above ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Gujarat High Court rendered in the case of CIT Vs. Chandrakumar Jethmal Kochar (2015) 55 Taxmann.com 292 (Gujarat), wherein it has been held that merely on the basis of admission that few benami concerns were being run by assessee, assessee could not be basis for making the assessee liable for tax and the assessee retracted from such admission and revenue could not furnish any corroborative evidence in support of such evidence. It was further urged by the assessee that admission should be based upon certain corroborative evidences. In the absence of corroborative evidences, the admission is merely a hollow statement. We have given our thoughtful consideration to the rival contentions of the parties. It is undisputed fact that the statement recorded u/s 132(4) of the Act has a better evidentiary value but it is also a settled position of law that the addition cannot be sustained merely on the basis of the statement. There has to be some material corroborating the contents of the statement. In the case in hand, revenue could not point out as what was the material before the A.O., which supported the contents of the statement. In the absence of such material, coupled with the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use of coercion exerted by the search officers. In explanation, it was submitted that the firm or the individual had no undisclosed income. The assessee s said retraction was not accepted by any of the authorities below on the ground that the statement given by the assessee appears to be voluntarily given statement disclosing undisclosed income of ₹ 20 lacs. According to the learned counsel for the assessee, Shri Binod Poddar, the Assessing Officer had full jurisdiction to proceed for further enquiry and could have collected evidence in support of alleged admission of undisclosed income of the assessee. 6. We are of the considered opinion that statement recorded under section 132(4) of the Income Tax Act, 1961 is evidence but its reliability depends upon the facts of the case and particularly surrounding circumstances. Drawing inference from the facts is a question of law. Here in this case, all the authorities below have merely reached to the conclusion of one conclusion merely on the basis of assumption resulting into fastening of the liability upon the assessee. The statement on oath of the assessee is a piece of evidence as per sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the decision relied by Ld. Departmental Representative laying down the ratio that addition can be made even on the basis of statement given during the course of search u/s 132(4) of the Act irrespective of the fact whether any incriminating material is found or not, will not support Revenue in the instant case. 26. In the given facts and circumstances of the case and respectfully following the judgements and decisions referred above we find that firstly the statement given by Mr. Vipin Chouhan u/s 132(4) of the Act on 02.02.2014 cannot be considered as the statement given u/s 132(4) of the Act in the instant case of the assessee firm since the search action in case of assessee was concluded on 31.1.2014 by the Authorised Officer. Secondly as regards to other business concerns referred by Mr. Vipin Chouhan in his statement given on 02.02.2014 and in case of such business concern wherein search action u/s 132 of the Act was continuing the said statement dated 02.02.2014 will be considered as the statement u/s 132(4) of the Act. Thirdly, no reference has been given by the Revenue Authorities to any incriminating material found during the course of search at the bus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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