2006 (7) TMI 162 - HC - Income Tax

Block assessment - notice issued u/s 158BC and 158BD - Admission made during search - rebuttal presumption - Whether the Tribunal was justified in ignoring the admission merely on the basis of later retraction in spite of its coming to the conclusion that any exercise of coercion or duress or threat by the search officials on the assessee or assessee's father, has not been established or proved in the instant case? - HELD THAT - From the perusal of the order of the Tribunal, we find that the Tribunal has nowhere stated that it is relying only on the retracted statement but a perusal of the Tribunal's order goes to show that it has correctly stated the principle regarding evaluation and evidentiary value of admissions of any person. It has merely stated that the admissions are relevant and strong piece of evidence that may be used against the person making such admission but they are not conclusive proof of the statement contained in the admission and can always be explained. The Tribunal also was of the view that once the admission made in the earlier statement is retracted, the second statement has to be read together to evaluate the weight of the admission for the purpose of appreciating the evidence. The principles are correctly stated by the Tribunal. We find from the material available on record that the assessee himself in his statement recorded u/s 132(4) has merely stated that he has purchased the constructed house for Rs. 8,50,000. So far as the investment in construction of house is concerned, the same is recorded in his books of account. That was only statement in his statement recorded u/s 132(4) during the search, on the very date, when his father's statement was recorded. The statement of the father of the assessee cannot be considered as the admission of his assessee on and the same could not be read as his admission. It may be noticed that the report about the market value of property on a given date, which is after the investment has been made is not of the exact amount of investments made when the property is acquired or constructed. Ordinarily in the case of immovable property the valuation report of the later date than acquisition or construction represents appreciated value of property at which it can be sold in open market or its estimated replacement cost. It is trite to say that admissions are relevant pieces of evidence and are not conclusive proof of fact. An admission can always be explained. Once this position is accepted, the question remains of appreciating evidence which is on record, which includes the evidence in the form of attending circumstances and the statements by which the previous statement is sought to be explained. Since the Tribunal after taking into consideration accepted the contention of the assessee that the declaration about the undisclosed income used in investment is acceptable, the finding being a finding of fact on the basis of record, cannot be said to be vitiated. Therefore, in our opinion, question No.1 has to be decided against the Revenue and in favour of the assessee that the Tribunal has not acted merely on the basis of retracted statement of the assessee but has acted and reached its conclusion by taking into consideration all relevant material. Question No. (ii) being an ancillary and part of question No.1, need not be considered independently - Accordingly, the appeal fails and is hereby dismissed.

Summary

Issues:
1. Whether the Tribunal was justified in ignoring the admission made by the assessee during the search?
2. Whether there was sufficient material to support the addition made by the Assessing Officer in the income of the assessee for undisclosed investment in house property during the block assessment period?

Analysis:
1. The appeal challenged the addition made by the Assessing Officer in the income of the assessee for undisclosed investment in house property. The Tribunal considered the statements of the assessee and his father, valuation reports, and other evidence. The Tribunal upheld the assessee's contention and restricted the assessment to the amount declared by the assessee. The Tribunal correctly evaluated the evidentiary value of admissions, stating that they are not conclusive proof and can be explained. The Tribunal's finding was based on a comprehensive review of all relevant material, not solely on the retracted statement.

2. The Assessing Officer made additions based on the statement of the father of the assessee, which the Revenue contended should be brought to tax. However, the High Court found that the Tribunal's decision was well-founded. The assessee had disclosed his total investment in the construction of the house, and the Tribunal considered all evidence, including valuation reports. The High Court emphasized that admissions are not conclusive proof and can be explained. The Tribunal's finding was based on a thorough evaluation of the available material, including the alleged admission and statements of the assessee and his father.

3. The High Court noted discrepancies in the statements of the father and son regarding the investment in the house property. The valuation reports also varied, indicating different market values. The High Court reiterated that admissions are relevant but not definitive evidence. The Tribunal's decision to accept the assessee's declaration about undisclosed income used in investment was upheld as a factual finding based on the evidence. Therefore, the appeal was dismissed, ruling in favor of the assessee.

Conclusion:
The High Court upheld the Tribunal's decision, emphasizing the importance of a comprehensive evaluation of all evidence in determining the validity of additions to the assessee's income. The Tribunal's finding was deemed valid as it considered all relevant material, including statements, valuation reports, and attending circumstances. The appeal was dismissed, affirming the Tribunal's decision in favor of the assessee.