TMI Blog2007 (3) TMI 821X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of the assessing officer, to the above extent. In ITA No. 4548/Ahd/2003 for assessment year 1996-97, the only effective ground raised by the revenue reads as under: 1. The learned Commissioner (Appeals) has erred in law and on facts in deleting the addition of ₹ 62,00,000 on account of cash receipts in Sujan bungalow transaction. 3. The facts of the case are that the assessee is an individual. The main source of assessee's income is share of profit from partnership-firm, income from other sources by way of interest, dividend and capital gains. 4. On 21-9-1995 a search was conducted under Section 132 of the Income Tax Act, 1961 ( the Act for short) at the premises of Gokul Corporation and its partners namely Shri Suresh A. Patel, who is one of the main partners of Gokul Corporation and its group. During the course of search enquiries in the case of Gokul Corporation, a number of incriminating documents were found and seized. A statement of Shri Suresh A. Patel was recorded under Section 132(4) of the Act. During the course of search proceedings and subsequent inquiries at the premises of Gokul Corporation and its partners undisclosed income of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement of Shri Kashyap Thakore was recorded on 5-12-1995. In reply to question No. 11 Shri Kashyap Thakore stated that he received ₹ 25 lakhs from Shri Suresh A. Patel, Further, in reply to question No. 12, he stated that this amount was received in 5 to 6 instalments from April to May, 1995. In reply to question No. 30 he stated that the receipt of cash was not accounted in his books of account. He stated that he purchased jewellery out of the said cash. 9. Thereafter, the statement of Shri Subhash Pande, another person connected with this transaction was recorded on oath on 1-1-1996 under Section 131. The relevant paras of his statement are reproduced as under: Question No. 4 What relation you had with Hashunagar Co-op. Housing Society ? Ans. I became member of the society about 4-5 years back. Later on became member of its managing committee also. Shri Dinesh Gupta was its chairman, but I do not remember the name of the secretary. I will give their address later on. In effect, I was made member of the managing committee of the society by Shri Raman Patel (of Popular House). As per my knowledge, the society was under control of Shri Ramanbhai. I had given cash pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hasunagar Co-op. Housing Society is perfectly true because I knew all the members. The job of getting NOC, liaison work was done by me. I also helped in development of one part of land i.e. Sujan plot. (2) Another part of this land admeasuring 22,000 sq. mtrs. was plotted out and its development work was entrusted to me. Since the development was a technical work, I took the help from Shri Kashyap Thakore. Another portion of land admeasuring 20,985 sq. yds. was given to Prarthana Construction through me for development. (3) Further, another portion of the land admeasuring about 51,145 sq. yds. was given to Desai Brothers through me for development. The remaining land i.e. 82,565 sq. mtrs. still vacant. Out of this, 35 per cent land is likely to be surrendered in TPS scheme. This is under litigation because the title clearance has not taken place. However, if the title clearance work is completed, then, its development work is likely to come to me only. Question No. 4 Please state what amount was received by you or your society for the transaction dealt by you above ? Ans. In this transaction, the society has worked on no profit and no loss account. All the official expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... struction, I requested him to inform me about the reason for calling my personal attendance before him and requested him that if the same is required for the purpose of cross-examination in any of the case proceedings, then it must be communicated to me in writing specifically that for which case my presence is required. He instead of informing me the reason for calling, he got annoyed and informed me that if I would not be ready for personal attendance, then he would conduct the survey and search proceedings under Section 132 of the Income Tax Act, 1961 in my case and the group. It is to be taken note of that myself being a regular assessee filing the return of income regularly since last more than one decade, only, in order to co-operate with the departmental authorities, I went to chamber of Shri Aditya Vikram before 10-1- 1996, along with one chartered accountant Shri Amrut Sanghvi. During the course of my personal presence, Shri Satish Sharma started interrogating myself in connection with one co-operative housing society known as Hasunagar Co-op. Housing Society Ltd. I objected to my interrogation while stating that I have no connection and/or nexus with Hasunagar Co-op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been given without undue pressure. Against the said para, I again objected to the Addl. Director of Income Tax that the statement has not been recorded as answers given by me. This statement should not have been recorded as I have not been given any summons for my personal attendance as well as for recording my statement. Ultimately, under the compelled circumstances, I placed the signature on the said statement, also requested the Additional Director of Income Tax to permit to place notings on the statement as regards to my objection which he refused. The Additional Director of Income Tax before permitting me to leave his chamber prepared the summons under Section 131(1A) of the Income Tax Act, 1961 and took the signature thereon. The retraction letter filed by Shri Raman B. Patel was not found to be correct on the following grounds: (1) His statement was recorded on 8-1-1996 whereas the retraction letter was filed after a lapse of 2 months. (2) The original statement was recorded in the presence of his counsel Shri A. L. Sanghvi. (3) The statement of Shri Raman B. Patel is supported by the statement of other person that is to say Shri Subhash Pande on 1-1-1996, S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Amrut Sanghvi and Shri Aditya Vikram, the then Deputy Director of Income Tax. Under these circumstances, how can assessee be pressurized. This is beyond my imagination. In fact, the time gap between the recording of his statement and filing of this retraction letter which is almost two months and also the fact that when assessee was called for further proceedings, he has changed his authorized representative tells the full story that the retraction is a mere afterthought and for retracting a lawfully recorded statement by an income-tax authority which in itself is an admissible evidence, assessee has no option but to make such false allegations and narrate incorrect acts. I hope above reply would suffice for your proceedings, however, if any further clarification is required, then the same may be done only after going through the records. In view of the abovementioned facts the original statement of Shri Raman-B. Patel was held to be correct whereas the retraction letter filed on 8-3-1996 was held to be afterthought without any merit as the original statement was corroborated by the statements of Shri Subhash Pande, Shri Kashyap Thakore and Shri Suresh A. Patel and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tedly, the statement had been recorded in connection with the post-search inquiries conducted in the case of M/s Gokul Corporation and its partner Shri Suresh A. Patel. No incriminating material or documentary evidence had been found or seized pertaining to the appellant from the residential or business premises of M/s Gokul Corporation or its partners. 26. The statement of the appellant was recorded on 8-1-1996 by the Additional Director of Income Tax (Investigation), Unit-II(2), Shri Satish Sharma in the presence of Shri Amrut Sanghvi chartered accountant. The statement was recorded at 3.00 A.M. at the office of the Additional Director of Income Tax (Investigation), Unit-II,(2). At the top of the statement it has been mentioned as statement under Section 132(1)/131, However, it is not specifically mentioned under what provisions of the Income Tax Act the statement has been Recorded. It is seen from the statement that at the time when the statement was recorded the appellant was doing liaison work for Universal Properties. Earlier he was a partner in the firm named as Popular State Corporation which was engaged in the business of land development scheme. He had also stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was to be given to Shri Subhash Pandey, ₹ 7.5 lakhs were invested in furniture and fixtures of the house belonging to the appellant. ₹ 25 lakhs had been invested in acquiring jewellery and silver utensils and ₹ 5 lakhs had been spent in various household expenses. Balance of the one portion of the remaining income had been invested in advancing money to various parties. The appellant had also stated that in order to account for the remaining amount of money he required further time. In other words, the statement was not completed on 8-1-1996. It appears that after recording the above statement the Additional Director of Income Tax (Investigation), Unit-II(2) wanted to further examine the appellant and record his statement. Accordingly, summons under Section 131(1A) of the Income Tax Act were issued and served to the appellant on 1-5-1996. In compliance to the above summons the appellant filed a written letter on 6-3-1996 wherein he stated that the summons under Section 131 of the Income Tax Act, 1961 had been served on the appellant in his individual capacity and that too also attendance has been required in connection with the proceedings under the Act in his cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein he retracted the statement made on 8-1-1996 on the ground that the statement had been taken under duress and that he had nothing to do with the affairs of Hasunagasr Co-op. Housing Society Ltd. and that he had never seen any money or cash in transaction related to the dealing of the land of the above society as deposed in the statement made on 8-1-1996. It is further seen that on the basis of the same statement the proceedings under Section 143(2), were also initiated in the case of Desai Brothers for assessment year 1893-94 wherein it was alleged that Desai Brothers had paid cash of ₹ 70 lakhs to Raman Patel for obtaining development rights in respect of 51,145 sq. yds. of land belonging to Hasunagar Co-op. Housing Society Ltd. During the course of Section 148 proceedings the authorised representative of Shri Dhiren Shah/chartered accountant cross-examined the appellant on 11-1-2000. In the cross-examination of the appellant he denied to have received any payment from Desai Brothers. He also reiterated the fact that the statement made on 8-1-1996 had been retracted on 6-3-1996. 28. From the facts mentioned above it is abundantly clear that the additions have been mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be deleted. 12. Following the decision for assessment years 1991-92 to 1993-94, the Commissioner (Appeals) vide his order dated 17-10-2003, deleted the addition for assessment year 1996-97 also. The revenue, being aggrieved, has come in appeal in each of the assessment years. 13. The learned Departmental Representative carried us to the facts of the case pointing out that there was a search in the premises of Gokul Corporation and its partner, namely, Shri Suresh A. Patel on 21-9-1995, The statement of the assessee was recorded under Section 131 on 8-1-1996 before the Additional Director of Income Tax when the assessee was accompanied by his chartered accountant and in this statement the assessee has made the disclosure for a sum of ₹ 117 lakhs and on the basis of this statement, the additions were made in the case of the assessee as under: The assessee claimed before the assessing officer that he made the retraction to the statement dated 8-1-1996 on 8-3-1996. The retraction made by the assessee is not valid. It was made after the expiry of 2 months and is an afterthought. The assessee has not given any evidence of pressure, threat or coercion. He has als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regular assessee in order to co-operate with the department, went to the chamber of Shri Aditya Vikram on 10-1-1996 along with Shri Amrut Sanghvi, chartered accountant. At this juncture, Shri Satish Sharma started interrogating the assessee in connection with one Co-operative Housing Society known as Hasunagar Co-op. Housing Society which was objected by the assessee. For these facts, our attention was drawn towards letter written by the assessee dated 8-3-1996 to the Director General of Income Tax, Investigation, Ahmedabad and copies sent to Director of Income Tax (Investigation) Ahmedabad, Commissioner, Gujarat-Ill, Ahmedabad, Deputy Director of Income Tax (Investigation), Ahmedabad, Assistant Director of Income Tax Investigation Unit-II(2), Ahmedabad, Deputy Commissioner, Range-8, Ahmedabad and the Income Tax Officer, Ward-8(7), Ahmedabad, for the copies of which our attention was drawn towards pp. 137 to 145 of the paper book. The Additional Director of Income Tax, prepared the summons under Section 131(1A) before the assessee could leave his chamber and took the signature on the copy of the same. The assessee was compelled to place his signature on the statement recorded by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndirect connection with the said society. Even the assessee was not a member or the office bearer of the managing committee of the society. The search proceedings were carried out in the case of Gokul Corporation and its partner Shri Suresh A. Patel. Referring to the statement of Shri Suresh A. Patel appearing at pp. 96 to 104 of the paper book recorded under Section 132(4) it was pointed out that Shri Suresh A. Patel nowhere identified the assessee. He has not stated anything about the assessee. No incriminating record or paper pertaining to the assessee was found and seized during the course of search conducted at the premises of Gokul Corporation and its partner Shri Suresh A. Patel. Our attention was also drawn towards the statement of Shri Kashyap Thakore dated 5-12-1995 recorded in the office of the Additional Director of Income Tax, copy of which is available at pp. 105 to 113 of the paper book and it was pointed out that Shri Kashyap Thakore has not stated anything about the assessee. At the cost of repetition, it was pointed out that the statement of the assessee was recorded on 8-1-1996 by the Additional Director of Income Tax (Investigation) when the inquiries/investigat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtner Shri Suresh A. Patel. The additions are merely made on the basis of the retracted statement of the assessee. No material whatsoever was brought on record by the assessing officer which may substantiate the statement of the assessee dated 8-1-1996 and also substantiate the additions. Even no cogent material or evidence was brought on record to establish that the assessee was having control over the affairs of Hasunagar Coop. Housing Society and the assessee has rendered the services to the said society in respect of development of land of the society during the relevant assessment year or in the subsequent assessment year. The assessee has asked for the cross-examinations of Shri Suresh A. Patel, Shri Kashyap Thakore and Shri Subhash Pande vide his letter dated 14-2-2000. The cross-examination of Shri Suresh A. Patel could not take place as he did not come on the date when the cross-examination was granted. In the cross-examination, in the statement Shri Kashyap Thakore denied to have any transaction with the assessee as well as in relation with the assessee for which our attention was drawn towards pp. 70 to 73 of the paper book. It was also pointed out that Shri Kashyap Thak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In respect of case law relied on by the learned Departmental Representative in the case of Manoharlal Kasturchand v. Assistant Commissioner (supra), it was pointed out that this case has also been considered by the Tribunal Ahmedabad Bench in the case of Asstt. CIT v. Jorawar Singh M. Rathod (supra). It was vehemently contended that in the absence of any cogent material or evidence no addition can be made on the basis of the statement which has already been retracted. Thus, it was contended that the order of the Commissioner (Appeals) be confirmed. 15. We have carefully considered the rival submissions and perused the material on record. We have also gone through the decisions relied upon by both the sides. This is an admitted fact that there is no search in the case of the assessee. The search was conducted in the case of Gokul Corporation and its partner Shri Suresh A. Patel. No material relating to the assessee was found during the course of search carried out at the premises of Gokul Corporation and its partner Shri Suresh A. Patel. Therefore, the assessing officer dropped the proceedings initiated under Section 158BD. The proceedings were initiated against the assessee by i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... knowledge, the society was under control of Shri Ramanbhai. I had given cash payment for 2 plots of the society. The exact amount of payment made by me is not remembered at present. Question. No. 5?Whether presently both these plots are under your possession or not ? Ans. No. As per the instruction of Shri Raman Patel, I sold both the plots to a person named Shri Suresh Patel through Shri Raman Patel. This deal was clinched as per my knowledge via Shri Kashyap Thakore of H K Construction. I had asked Shri Kashyap Thakore to give the cash received on sale of these plots to Shri Raman Patel. I had asked Shri Raman Patel to keep the cash. The cash so realized was thus, to be received by me from Shri Raman Patel only. Question. No. 5?Whether cheque payment has been made to you with respect to the said land ? Ans. Yes Sir-I am to receive cheque payments through the society whereas the cash payment is to be received by me directly from Shri Raman Patel. Question. No. 6?Whether this amount has been received by you from Shri Raman Patel ? Ans. I am to receive from Shri Raman Patel ₹ 25 lakhs in cash on account of sale of these 2 plots. The cheque amount is to be rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his statement dated 8-1-1996 vide his petition dated 8-3-1996. We have gone through various case law as relied upon by the learned departmental Representative. 16. We find that in the case of Manoharlal Kasturchand v. Asstt. CIT (supra) this Tribunal has not accepted the retraction made by the assessee because there was nothing on record that the disclosure was made by the assessee under duress, pressure and coercion and the retraction was made after a lapse of 2 months from the date of disclosure by the assessee. Even para 2 of that order clearly shows that the assets and investments were found during the course of search in the case of that assessee and the surrender was made by the assessee by way of statement recorded under Section 132(4). This decision, in our opinion, will not help the revenue because in the case of the assessee before us, there was no search. No undisclosed assets or investments were found during the course of the search. There are evidences which prove that the statement made by the assessee has been recorded by the Additional Director of Income Tax under duress, pressure and coercion. This is also a fact on record that the retraction has been made by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e basis of the statement recorded under Section 131 which has been retracted and such statement cannot be. bedrock or foundation of an assessment. No corroborative evidence brought to our knowledge which proves that the assessee has earned the income. In our opinion, the tax is imposable on the real income. Tax can be collected only as provided under the Income Tax Act. If an assessee, under a mistaken misconception or on not being properly instructed, is over assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected. No addition can be made merely on pure guess and without reference to any evidence or material at all. There must be something more than bare suspicion to support the assessment or addition. The same view has been taken by this Bench in the case of Asstt. CIT v. Jorawar Singh M. Rathod (supra). 21. We find that Kelkar Committee has not appreciated the action of the revenue of taking the statement of the assessees under duress, pressure and coercion. In our opinion, the proposition of law is well-settled that the admission made by the assessee until and unless it is not retracted validly in view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven on the search day, then the court or Tribunal should try to ascertain the reasons or circumstances from such person for doing so and, if satisfied, not to place heavy reliance on such earlier statement which has subsequently been denied and retracted. Tribunal in the case of Dineshchandra J. Dina v. ITO (2000) 112 Taxman 107 (Ahd) held : A party is entitled to show and prove that an admission made by him previously was in fact not correct and true. Hon'ble Apex Court in the case of Krishna v. Kurukshtra University (supra) held : An admission based on ignorance of fact is not binding. Hon'ble Punjab Haryana High Court in the case of Krishan Lal Shiv Chand Rai v. CIT (supra) held : It is an established principle of law that a party is entitled to show and prove that an admission made by him previously was in fact not correct and true. Tribunal in the case of R.P. Locks Company v. Dy. CIT held : Statement of assessee under Section 132(4) surrendering certain amount is legally relevant but it is open to a party making an admission to explain, clarify and demonstrate on basis of positive material under what circumstances admission was made or to prove that wha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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